What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 206 added, 238 removed, 500 unchanged (47% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

September 30, 2021 December 31, 2020

(in thousands, except share data)

March 31, 2022 December 31, 2021

Current assets

1 unchanged sentence

Short-term investments and marketable securities 53,438 55,179

Accounts receivable, net of allowance of $ 1,400 as of each of September 30, 2021 and December 31, 2020

Accounts receivable, net of allowance of $ 1,402 and $ 1,400 as of March 31, 2022 and December 31, 2021, respectively

121,630 130,049

1 unchanged sentence

Prepaid expenses and other current assets 30,354 26,781

Restricted cash, current 776 791

Total current assets 338,663 338,264

Property and equipment, net 34,280 35,404

Property and equipment, net of accumulated depreciation of $ 15,473 and $ 14,106 as of March 31, 2022 and December 31, 2021, respectively

38,526 36,913

Long-term investments 8,184 12,044

Goodwill 27,271 27,795

Intangible assets, net of accumulated amortization of $ 902 and $ 429 as of September 30, 2021 and December 31, 2020, respectively

Intangible assets, net of accumulated amortization of $ 1,630 and $ 1,260 as of March 31, 2022 and December 31, 2021, respectively

Operating right-of-use assets 27,556 27,897

1 unchanged sentence

Deferred tax assets 1,992 1,025

Restricted cash, non-current 3,240 —

Restricted cash, net of current portion 2,328 2,373

Other assets 1,980 2,047

16 unchanged sentences

Class A common stock—par value $ 0.0001 ;

500,000,000 shares authorized and 39,667,317 shares issued and outstanding as of September 30, 2021;

500,000,000 shares authorized and 40,829,564 shares issued and outstanding as of March 31, 2022;

500,000,000 shares authorized and 39,964,298 shares issued and outstanding as of December 31, 2021

Class B common stock—par value $ 0.0001 ;

100,000,000 shares authorized and 31,499,516 shares issued and outstanding as of September 30, 2021;

100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of March 31, 2022;

100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of December 31, 2021

8 unchanged sentences

(unaudited, in thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Subscriptions $ 83,720 $ 63,766

12 unchanged sentences

Operating loss ( 23,866 ) ( 10,490 )

Other expense (income)

Other expense (income), net 2,329 ( 4,277 ) 4,141 ( 1,845 )

Other expense

Other expense, net 787 2,893

Interest expense 74 81

Total other expense (income) 2,401 ( 4,158 ) 4,374 ( 1,455 )

Total other expense 861 2,974

Loss before income taxes ( 24,727 ) ( 13,464 )

Income tax expense 86 255 459 335

Income tax (benefit) expense ( 1,573 ) 123

Net loss $ ( 23,154 ) $ ( 13,587 )

7 unchanged sentences

(unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net loss $ ( 23,154 ) $ ( 13,587 )

Comprehensive income (loss), net of income taxes

Comprehensive income, net of income taxes

Foreign currency translation adjustment 757 4,015

Unrealized gains on available-for-sale securities — — 31 —

Unrealized (losses) gains on available-for-sale securities ( 111 ) 8

Total other comprehensive loss, net of income taxes $ ( 22,508 ) $ ( 9,564 )

14 unchanged sentences

Balance, March 31, 2022 72,327,360 $ 7 $ 528,475 $ ( 5,041 ) $ ( 280,685 ) $ 242,756

Net loss — — — — ( 23,825 ) ( 23,825 )

Issuance of common stock to directors 1,175 — — — — —

Vesting of restricted stock units 43,024 — — — — —

Exercise of stock options 211,651 — 1,464 — — 1,464

Stock-based compensation expense — — 4,598 — — 4,598

Other comprehensive loss — — — ( 1,451 ) — ( 1,451 )

Balance, June 30, 2021 71,080,595 7 485,079 ( 2,438 ) ( 206,302 ) 276,346

Net loss — — — — ( 25,384 ) ( 25,384 )

Issuance of common stock to directors 1,130 — — — — —

Vesting of restricted stock units 38,148 — — — — —

Exercise of stock options 46,960 — 286 — — 286

Stock-based compensation expense — — 5,200 — — 5,200

Other comprehensive income — — — 28 — 28

Balance, September 30, 2021 71,166,833 $ 7 $ 490,565 $ ( 2,410 ) $ ( 231,686 ) $ 256,476

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

APPIAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share data)

Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity

Common Stock Additional Paid-In Capital Accumulated Deficit

Shares Amount

Balance, January 1, 2021 70,679,190 $ 7 $ 470,498 $ ( 5,010 ) $ ( 168,890 ) $ 296,605

6 unchanged sentences

Balance, March 31, 2021 70,824,745 $ 7 $ 479,017 $ ( 987 ) $ ( 182,477 ) $ 295,560

Net loss — — — — ( 11,815 ) ( 11,815 )

Issuance of common stock from public offering, net of issuance costs 1,931,206 1 107,914 — — 107,915

Issuance of common stock to directors 2,296 — — — — —

Vesting of restricted stock units 13,567 — — — — —

Exercise of stock options 248,165 — 1,571 — — 1,571

Stock-based compensation expense — — 3,614 — — 3,614

Other comprehensive loss — — — ( 214 ) — ( 214 )

Balance, June 30, 2020 69,840,315 7 458,174 ( 482 ) ( 158,897 ) 298,802

Net loss — — — — ( 3,612 ) ( 3,612 )

Issuance of common stock to directors 2,417 — — — — —

Vesting of restricted stock units 33,641 — — — — —

Exercise of stock options 143,816 — 934 — — 934

Stock-based compensation expense — — 3,578 — — 3,578

Other comprehensive loss — — — ( 1,960 ) — ( 1,960 )

Balance, September 30, 2020 70,020,189 $ 7 $ 462,686 $ ( 2,442 ) $ ( 162,509 ) $ 297,742

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

APPIAN CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

3 unchanged sentences

Bad debt expense ( 2 ) —

Loss on disposal of property and equipment 78 22

Change in fair value of available-for-sale securities 111 ( 8 )

12 unchanged sentences

Cash flows from investing activities

Proceeds from sale of investments 84,592 —

Payments for acquisitions, net of cash acquired ( 30,729 ) ( 6,138 )

Purchases of investments ( 16,240 ) —

Proceeds from investments 21,729 5,625

Purchases of property and equipment ( 3,390 ) ( 468 )

Net cash provided by (used in) investing activities 51,390 ( 7,174 )

Net cash provided by investing activities 2,099 5,157

Cash flows from financing activities

Principal payments on finance leases — ( 1,080 )

Proceeds from public offering, net of underwriting discounts — 108,260

Payments of costs related to public offerings — ( 18 )

Proceeds from exercise of common stock options 24,404 625

11 unchanged sentences

Organization and Description of Business

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) helps organizations build applications and workflows rapidly, with a low-code automation platform.

Combining people, technologies, and data in a single workflow, Appian can help companies maximize their resources and improve business results.

Many of the world’s largest organizations use Appian applications to improve customer experience, achieve operational excellence, and simplify global risk management and compliance.

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) provides a low-code platform that accelerates the creation of high-impact business applications and workflows, enabling our customers to automate the most important aspects of their business.

The Appian Low-Code Platform unifies the key capabilities needed to get work done faster:

Process Mining + Workflow + Automation.

Since 1999, industry leaders have trusted Appian and our open, enterprise-grade platform.

Global organizations use our applications to improve customer experience, achieve operational excellence, and simplify global risk management and compliance.

We were incorporated in the state of Delaware in August 1999.

12 unchanged sentences

Significant estimates embedded in the condensed consolidated financial statements include revenue recognition, income taxes and the related valuation allowance, the valuation of goodwill and intangible assets, leases, costs to obtain a contract with a customer, the valuation of financial instruments, and stock-based compensation.

The ongoing outbreak of the novel coronavirus disease ("COVID-19") has resulted in the declaration of a global pandemic and introduced a level of disruption and uncertainty into the financial markets and global economy.

While we continue to monitor the developments surrounding the pandemic, as of the date of issuance of these financial statements, we are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments or revise the carrying value of our assets or liabilities.

The ongoing outbreak of the novel coronavirus disease (“COVID-19”) resulted in the declaration of a global pandemic and introduced a level of disruption and uncertainty into the financial markets and global economy.

While the pandemic has been moving toward a controlled stage in the United States, we continue to monitor the developments surrounding the pandemic as of the date of issuance of these financial statements.

We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions, and judgments or revise the carrying value of our assets or liabilities.

We cannot estimate the impacts COVID-19 may have on our business going forward as such impacts will be largely dependent upon a number of factors outside of our control including the extent and duration of the outbreak as well as any mitigating actions which may be undertaken by global governments and the general public.

2 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

Public Offering

In June 2020, we completed an underwritten public offering of 2,500,000 shares of our Class A common stock, of which 1,931,206 shares of Class A common stock were sold by us and 568,794 shares of Class A common stock were sold by existing stockholders.

The underwriter purchased the shares from us and the selling stockholders at a price of $ 56.50 per share.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

proceeds from the offering were $ 107.9 million, after deducting underwriting discounts and commissions and offering expenses.

We did not receive any of the proceeds from the sale of shares by the selling stockholders.

Revenue Recognition

7 unchanged sentences

Concentration of Credit and Customer Risk

Our financial instruments exposed to concentration of credit and customer risk consist primarily of cash, cash equivalents, and restricted cash, accounts receivable, and our short- and long-term investments.

Our financial instruments exposed to concentration of credit and customer risk consist primarily of cash, cash equivalents, restricted cash, accounts receivable, and our short- and long-term investments.

Deposits held with banks may exceed the amount of insurance provided on such deposits;

2 unchanged sentences

We believe no additional credit risk beyond amounts provided for collection loss are inherent in accounts receivable.

Revenue generated from government agencies represented 19.2 % and 20.0 % of our revenue for the three and nine months ended September 30, 2021, respectively, of which the top three U.S.

federal government agencies generated 7.5 % and 6.3 % of our revenue for the three and nine months ended September 30, 2021, respectively.

Additionally, 32.0 % and 33.1 % of our revenue during the three and nine months ended September 30, 2021, respectively, was generated from foreign customers.

Revenue generated from government agencies represented 19.9 % and 17.9 % of our revenue for the three and nine months ended September 30, 2020, respectively, of which the top three U.S.

federal government agencies generated 8.7 % and 7.4 % of our revenue for the three and nine months ended September 30, 2020, respectively.

Additionally, 32.2 % and 34.0 % of our revenue during the three and nine months ended September 30, 2020, respectively, was generated from foreign customers.

Revenue generated from government agencies represented 18.1 % and 20.9 % of our revenue for the three months ended March 31, 2022 and 2021, respectively, of which the top three U.S.

federal government agencies generated 4.6 % and 6.9 % of our revenue for the three months ended March 31, 2022 and 2021, respectively.

Additionally, 33.5 % and 32.2 % of our revenue during the three months ended March 31, 2022 and 2021, respectively, was generated from foreign customers.

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

Restricted cash consists of cash designated to settle an escrow liability stemming from a holdback agreement enacted pursuant to our acquisition of Lana Labs GmbH (“Lana Labs”).

The restrictions on 25 % of the restricted cash balance will lapse on the later of either two months following the establishment of Lana Labs' annual financial statements for the year ended December 31, 2021 or October 31, 2022.

The restriction on 25 % of the balance will lapse on the later of either two months following the establishment of Lana Labs' annual financial statements for the year ended December 31, 2021 or October 31, 2022.

The restrictions on the remaining 75 % of the balance will lapse on August 11, 2023.

The following table presents a reconciliation of cash, cash equivalents, and restricted cash as presented in the condensed consolidated statements of cash flows:

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30,

The following table presents a reconciliation of cash, cash equivalents, and restricted cash as presented in the condensed consolidated statements of cash flows (in thousands):

As of March 31,

Cash and cash equivalents $ 106,795 $ 114,752

Restricted cash, non-current 3,240 —

Restricted cash, current 776 —

Restricted cash, net of current portion 2,328 —

Total cash, cash equivalents, and restricted cash $ 109,899 $ 114,752

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable and Allowance for Doubtful Accounts

3 unchanged sentences

If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for doubtful accounts would be required and would increase bad debt expense.

There was no increase in the allowance for doubtful accounts from December 31, 2020 to September 30, 2021.

There was an immaterial increase in the allowance for doubtful accounts from December 31, 2021 to March 31, 2022.

Assets Recognized from the Costs to Obtain a Contract with a Customer

We capitalize costs of obtaining a contract with a customer, including sales commissions paid to our direct sales force, that are incremental costs to obtaining customer contracts.

We capitalize costs of obtaining a contract with a customer, including sales commissions paid to our direct sales team, that are incremental costs to obtaining customer contracts.

These costs are recorded as deferred commissions in the condensed consolidated balance sheets.

3 unchanged sentences

Commissions paid relating to contract renewals are deferred and amortized over the related renewal period.

We also capitalize the incremental fringe benefits associated with commission expenses paid to our direct sales force.

We also capitalize the incremental fringe benefits associated with commission expenses paid to our direct sales team.

Costs to obtain a contract for professional services arrangements are expensed as incurred as the contractual period of our professional services arrangements are one year or less.

Amortization associated with deferred commissions is recorded to sales and marketing costs in our condensed consolidated statements of operations.

Commission expense was $ 8.2 million and $ 22.5 million for the three and nine months ended September 30, 2021, respectively.

Commission expense was $ 5.6 million and $ 16.7 million for the three and nine months ended September 30, 2020, respectively.

Amortization associated with deferred commission is recorded to sales and marketing costs in our condensed consolidated statements of operations.

Commission expense was $ 8.2 million and $ 6.8 million for the three months ended March 31, 2022 and 2021, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization.

Property and equipment are stated at cost less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

7 unchanged sentences

(a) Leasehold improvements have an estimated useful life of the shorter of the useful life of the assets or the lease term.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Business Combinations

2 unchanged sentences

The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, non-contractual relationships, and expected future synergies.

Determining the fair value of assets acquired and liabilities assumed requires us to use significant judgments and estimates, including the selection of valuation methodologies, estimates of future revenue, costs, and cash flows, and discount rates.

Determining the fair value of assets acquired and liabilities assumed

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

requires us to use significant judgments and estimates, including the selection of valuation methodologies, estimates of future revenue, costs, and cash flows, and discount rates.

During the measurement period, which can be up to one year from the acquisition date, these estimates may be refined, as necessary, and we may record adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

1 unchanged sentence

Acquisition related expenses and post-acquisition integration costs are recognized separately from the business combination and are expensed as incurred.

Acquired property and equipment is depreciated on a straight-line basis over the assets' respective estimated remaining useful lives.

Impairment of Goodwill and Long-Lived Assets

6 unchanged sentences

Because we operate under one reporting unit, the fair value of our reporting unit is based on our enterprise value.

No indicators of impairment were identified for the three and nine months ended September 30, 2021 and 2020.

No indicators of impairment were identified for the three months ended March 31, 2022 or 2021.

Investments and Fair Value of Financial Instruments

8 unchanged sentences

We account for forfeitures as they occur rather than estimating expected forfeitures.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Refer to Note 4 for a detailed discussion on our policies specific to leasing arrangements.

Recent Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which amends and aims to simplify accounting disclosure requirements regarding a number of topics including, but not limited to, intraperiod tax allocations, accounting for deferred taxes when there are changes in the consolidation of certain investments, tax basis step ups in an acquisition, and the application of effective rate changes during interim periods.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The adoption of the new guidance did not have a material impact on our condensed consolidated financial statements.

Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates such as the Secured Overnight Financing Rate ("SOFR").

This guidance is effective upon issuance and generally can be applied through the end of calendar year 2022.

We are currently evaluating the impact and applicability of this new standard.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

In October 2021, the FASB issued Accounting Standard Update (“ASU”) 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which aims to improve the accounting for acquired revenue contracts with customers in a business combination.

1 unchanged sentence

The guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years.

Early adoption is permitted including in interim periods.

We are currently evaluating the impact and applicability of this new standard.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

adoption is permitted including in interim periods.

The adoption of the new guidance did not have a material impact on our condensed consolidated financial statements.

Revenue Recognition

1 unchanged sentence

We generate professional services revenue from fees for our consulting services, including application development and deployment assistance as well as training related to our platform.

The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The following table summarizes revenue from contracts with customers for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

SaaS subscriptions $ 53,379 $ 39,053

5 unchanged sentences

Performance Obligations and Timing of Revenue Recognition

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We primarily sell products and services that fall into the categories discussed below.

13 unchanged sentences

Term License Subscriptions

Our term license subscriptions revenue is derived from customers with on-premises installations of our platform pursuant to contracts that were historically one to three years in length.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our term license subscription revenue is derived from customers with on-premises installations of our platform pursuant to contracts that were historically one to three years in length.

The majority of recent contracts have been one year in length.

12 unchanged sentences

Consulting services are regularly sold on a standalone basis and either (1) under a fixed-fee arrangement or (2) on a time and materials basis.

Consulting contracts are each considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer's ability to use the other consulting offerings or other products and

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue under consulting contracts is recognized over time as services are delivered.

8 unchanged sentences

Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur.

The amount of variable consideration excluded from the transaction price for the three and nine months ended September 30, 2021 and 2020 was insignificant.

The amount of variable consideration excluded from the transaction price for the three months ended March 31, 2022 and 2021 was insignificant.

Our estimates of variable consideration are also subject to subsequent true-up adjustments and may result in changes to transaction prices;

5 unchanged sentences

We establish SSP as follows:

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SaaS subscriptions - Given the highly variable selling price of our SaaS subscriptions, we establish the SSP of our SaaS subscriptions using a residual approach after first determining the SSP of consulting and training services.

9 unchanged sentences

Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional.

As of September 30, 2021 and December 31, 2020, contract assets of $ 13.4 million and $ 20.1 million, respectively, are included in the Prepaid expenses and other current assets and Other assets line items in our condensed consolidated balance sheets.

As of March 31, 2022 and December 31, 2021, contract assets of $ 15.6 million and $ 14.0 million, respectively, are included in the Prepaid expenses and other current assets and Other assets line items in our condensed consolidated balance sheets.

Contract liabilities consist of deferred revenue and include payments received in advance of the satisfaction of performance obligations.

Deferred revenue is then recognized as the revenue recognition criteria are met.

Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2021, we recognized $ 103.5 million of revenue that was included in the deferred revenue balance as of December 31, 2020.

Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

For the three months ended March 31, 2022, we recognized $ 65.7 million of revenue that was included in the deferred revenue balance as of December 31, 2021.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2021, we had an aggregate transaction price of $ 246.7 million allocated to unsatisfied performance obligations.

As of March 31, 2022, we had an aggregate transaction price of $ 290.8 million allocated to unsatisfied performance obligations.

We expect to recognize $ 186.0 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

As of March 31, 2022, we have operating leases for corporate offices.

Our operating leases have remaining lease terms of roughly 1 year to 10 years, some of which include options to extend the leases for up to an additional 10 years.

Right-of-Use (“ROU”) Assets and Lease Liabilities

At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease.

Operating leases with a term greater than one year are recognized on the balance sheet as right-of-use ("ROU") assets, lease liabilities, and, if applicable, long-term lease liabilities.

Operating leases with a term greater than one year are recognized on the balance sheet as ROU assets, lease liabilities, and, if applicable, long-term lease liabilities.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

1 unchanged sentence

For contracts with lease and non-lease components, we have elected not to allocate the contract consideration but rather to account for the lease and non-lease components as a single lease component.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.

7 unchanged sentences

For certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense.

We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component.

Variable lease payment amounts that cannot be determined at the commencement of the lease, such as maintenance costs based on future obligations, are not included in ROU assets or lease liabilities but rather are expensed as incurred and recorded as variable lease expense.

As of September 30, 2021, we have operating leases for corporate offices.

Our operating leases have remaining lease terms of roughly 2 years to 10 years, some of which include options to extend the leases for up to 10 years.

Headquarters Lease

In April 2018, we entered into a lease agreement with respect to 176,222 square feet of office space in McLean, Virginia for a new corporate headquarters.

7 unchanged sentences

Effective July 1, 2020, we took possession of the space, began to recognize rent expense, and recorded a $ 7.9 million ROU asset and lease liability on our condensed consolidated balance sheets.

In November 2021, we entered into a third amendment to our headquarters lease, in which we exercised an option to expand occupancy into two adjacent office spaces of 32,883 and 25,925 square feet, with occupancy to commence on September 1, 2022 and May 1, 2023, respectively.

Concurrent with the amendment, we also entered into a sublease agreement in which we agreed to sublease 32,883 square feet of space effective September 1, 2022.

The sublease terminates on August 31, 2025 but may be extended one additional year at the sublessee’s option.

The amendment is considered a modification to the original lease and each space is accounted for as a separate contract because it represents a new ROU asset and the lease costs charged on the new spaces are at prevailing market rates.

As of March 31, 2022, we have not taken possession of either space nor met the criteria for the leases and sublease to be considered commenced.

Accordingly, we have not reported an ROU asset or liability on our condensed consolidated balance sheets nor have recorded expense or sublease income on our condensed consolidated statements of operations in relation to the additional spaces.

We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In October 2020, we paid the full $ 2.7 million principal balances outstanding under our finance leases pursuant to an option permitting us to pay such balances in full at any time.

As of the date of the paydown, the titles to the assets were transferred to us, the associated lease liabilities were retired, the carrying values of the purchased assets were adjusted, and the assets were reclassified from finance leases to property and equipment, net on the condensed consolidated balance sheets.

The following table sets forth the components of lease expense for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The following table sets forth the components of lease expense for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Operating lease cost $ 1,634 $ 1,630

Finance lease costs:

Amortization of right-of-use assets — 373 — 1,118

Interest on lease liabilities — 41 — 138

Short-term lease cost 88 41

1 unchanged sentence

Total $ 2,695 $ 1,696

Supplemental balance sheet information related to operating leases as of September 30, 2021 and December 31, 2020 was as follows (in thousands, except for lease term and discount rate):

September 30, 2021 December 31, 2020

Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of March 31, 2022 and December 31, 2021 was as follows (in thousands, except for lease term and discount rate):

March 31, 2022 December 31, 2021

Operating right-of-use assets $ 27,556 $ 27,897

4 unchanged sentences

Weighted average discount rate 9.5 % 9.5 %

For the three and nine months ended September 30, 2021, amortization of operating ROU assets totaled $ 0.7 million and $ 1.4 million, respectively.

For the three and nine months ended September 30, 2020, amortization of operating ROU assets totaled $ 0.4 million and $ 1.3 million, respectively.

For the three and nine months ended September 30, 2021, interest expense on operating lease liabilities totaled $ 0.5 million and $ 1.4 million, respectively.

For the three and nine months ended September 30, 2020, interest expense on operating lease liabilities totaled $ 0.7 million and $ 2.2 million, respectively.

Supplemental cash flow information related to leases for the nine months ended September 30, 2021 and 2020 was as follows (in thousands):

Supplemental cash flow and expense information related to operating leases for the three months ended March 31, 2022 and 2021 was as follows (in thousands):

Three Months Ended March 31,

Operating cash outflows for operating leases $ 2,085 $ 1,749

Amortization of operating ROU assets 306 324

Interest expense on operating lease liabilities 1,321 402

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases $ 5,295 $ 1,716

Operating cash outflows for finance leases — 138

Financing cash outflows for finance leases — 1,080

A summary of our future minimum lease commitments under non-cancellable leases as of September 30, 2021 is as follows (in thousands):

A summary of our future minimum lease commitments under non-cancellable leases as of March 31, 2022 is as follows (in thousands):

Operating Leases

2021 (excluding the nine months ended September 30, 2021)

2022 (excluding the three months ended March 31, 2022)

Thereafter 48,775

2 unchanged sentences

Total $ 56,099

In August 2021, we completed the acquisition of Lana Labs, a developer of process mining software, for approximately $ 30.7 million, net of cash acquired and debt.

Business Combinations

In August 2021, we acquired 100 % of the outstanding common stock of Lana Labs, a developer of process mining software, for approximately $ 30.7 million, net of cash acquired and debt.

The acquisition was made due to the attractive nature of the product offerings of Lana Labs and in furtherance of our objective to enhance our automation platform.

14 unchanged sentences

Net assets acquired $ 31,017

There were no changes to our reportable segments as a result of the acquisition, and acquisition costs incurred in relation to the transaction were immaterial.

We do not expect the purchase price allocated to goodwill and intangible assets to be deductible for tax purposes.

Since the acquisition date, measurement period adjustments have included a $ 0.8 million adjustment to developed technology and goodwill related to an update to the discount rate utilized in our valuation of intangibles, a $ 0.3 million increase in deferred revenue stemming from our early adoption of new accounting guidance surrounding deferred revenue recognized pursuant to a business combination, a $ 0.1 million deferred tax adjustment, and an immaterial adjustment to working capital.

No additional measurement period adjustments were recognized for the three months ended March 31, 2022.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

There were no changes to our reportable segments as a result of the acquisition.

From the acquisition date to September 30, 2021, Lana Labs' revenue was immaterial and net loss before taxes was $ 1.2 million.

Acquisition costs incurred in relation to the transaction were immaterial.

We do not expect the purchase price allocated to goodwill and intangible assets to be deductible for tax purposes.

Goodwill and Intangible Assets

Goodwill was comprised of the following as of March 31, 2022 and December 31, 2021 (in thousands):

Carrying Amount

Balance as of December 31, 2020

Goodwill acquired 24,521

Foreign currency translation adjustments ( 1,588 )

Balance as of December 31, 2021

Goodwill acquired —

Foreign currency translation adjustments ( 524 )

Balance as of March 31, 2022

Intangible assets, net consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

Developed technology $ 7,133 $ 7,271

Customer relationships - Non-Robotic Process Automation (“RPA”) 856 872

Customer relationships - RPA 256 261

Intangible assets, gross 8,245 8,404

accumulated amortization ( 1,630 ) ( 1,260 )

Intangible assets, net $ 6,615 $ 7,144

Intangible amortization expense was $ 0.4 million and $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the weighted average remaining amortization periods for developed technology, non-RPA customer relationships, and RPA customer relationships were approximately 4.2 years, 8.9 years, and 7.8 years, respectively.

The projected annual amortization expense related to amortizable intangible assets as of March 31, 2022 is as follows (in thousands):

Projected Amortization

2022 (excluding the three months ended March 31, 2022) $ 1,181

Thereafter 400

Total projected amortization expense $ 6,615

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment, net

Property and equipment, net consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Property and equipment, net consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

Leasehold improvements $ 42,630 $ 41,005

6 unchanged sentences

Property and equipment, net $ 38,526 $ 36,913

Depreciation expense totaled $ 1.2 million and $ 3.6 million for the three and nine months ended September 30, 2021, respectively.

We retired $ 0.1 million of leasehold improvements during the three and nine months ended September 30, 2021 and similarly recorded $ 0.1 million in losses on disposal for the three and nine months ended September 30, 2021.

Depreciation expense totaled $ 1.4 million and $ 4.2 million for the three and nine months ended September 30, 2020.

There were no disposals recorded during the three months ended September 30, 2020.

During the nine months ended September 30, 2020, we retired $ 1.3 million of leasehold improvements, $ 0.1 million of computer hardware, and $ 0.1 million of office furniture and fixtures and equipment.

No minal losses on disposal were recorded for the nine months ended September 30, 2020.

Depreciation expense totaled $ 1.4 million and $ 1.2 million for the three months ended March 31, 2022 and 2021, respectively.

We had no disposals or retirements and recorded no gains or losses on disposal during each of the three months ended March 31, 2022 and 2021.

Accrued Expenses

Accrued expenses consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Accrued expenses consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

Accrued hosting costs $ 3,044 $ 1,995

4 unchanged sentences

Accrued reimbursable employee expenses 1,023 870

Accrued audit and tax expenses 256 370

Accrued taxes payable 732 550

Accrued audit and tax expenses 504 439

Accrued capital expenditures — 379

Other accrued expenses 1,851 2,615

1 unchanged sentence

Line of Credit

In November 2017, we entered into a $ 20.0 million revolving line of credit with a lender.

In December 2021, we executed the first loan modification agreement which extended the revolving line of credit's maturity date from November 2022 to November 2025 and amended certain borrowing terms and financial covenants, and in January 2022, we executed the second loan modification agreement to increase the aggregate amount of funds our foreign subsidiaries are allowed to maintain outside of the United States.

Under the amended agreement, we may elect whether amounts drawn on the revolving line of credit bear interest on the outstanding principal amount at a rate per annum equal to either a) the Prime rate plus an additional interest rate margin or b) the secured overnight financing rate (“SOFR”) plus an additional interest rate margin that is determined by the availability of the borrowings under the revolving line of credit.

The additional interest rate margin will range from 0.75 % to 1.25 % in the

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In November 2017, we entered into a $ 20.0 million revolving line of credit with a lender.

The facility matures in November 2022.

We may elect whether amounts drawn on the revolving line of credit bear interest at a floating rate per annum equal to either LIBOR or the Prime rate plus an additional interest rate margin that is determined by the availability of the borrowings under the revolving line of credit.

The additional interest rate margin will range from 2.00 % to 2.50 % in the case of LIBOR advances and from 1.00 % to 1.50 % in the case of Prime rate advances.

The revolving line of credit contains an unused facility fee in an amount between 0.15 % and 0.25 % of the average unused portion of the revolving line of credit, which is payable quarterly.

The agreement contains certain customary affirmative and negative covenants and requires us to maintain (i) an adjusted quick ratio of at least 1.35 to 1.00 and (ii) minimum adjusted EBITDA, in the amounts and for the periods set forth in the agreement.

case of Prime rate advances and from 1.75 % to 2.25 % in the case of SOFR advances.

The revolving line of credit contains an unused facility fee up to 0.20 % of the average unused portion of the revolving line of credit, which is payable quarterly.

The agreement contains certain customary affirmative and negative covenants and requires us to maintain (i) an adjusted quick ratio of at least 1.35 to 1.00 subject to a net cash threshold as set forth in the agreement and (ii) minimum adjusted EBITDA, in the amounts and for the periods set forth in the agreement.

Any amounts borrowed under the credit facility are collateralized by substantially all of our assets.

We were in compliance with all covenants as of September 30, 2021.

As of September 30, 2021, we had no outstanding borrowings under this revolving line of credit, and we had outstanding letters of credit totaling $ 11.2 million in connection with securing our leased office space.

We also continue to monitor the LIBOR to SOFR transition, which may result in modification or amendment of our existing revolving line of credit.

We were in compliance with all covenants as of March 31, 2022.

As of March 31, 2022, we had no outstanding borrowings under this revolving line of credit, and we had outstanding letters of credit totaling $ 11.2 million in connection with securing our leased office space.

The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant or unusual items, discrete events, or changes in tax law.

1 unchanged sentence

Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the condensed consolidated financial statements.

For the three and nine months ended September 30, 2021, the actual effective tax rates were ( 0.3 )% and ( 0.7 )%, respectively.

For the three and nine months ended September 30, 2020, the actual effective tax rates were ( 7.6 )% and ( 1.3 )%, respectively.

For the three months ended March 31, 2022 and 2021, the actual effective tax rates were 6.4 % and ( 0.9 )%, respectively.

The year to date tax benefit for the three months ended March 31, 2022 was primarily driven by a discrete benefit of $ 1.1 million related to the release of a valuation allowance for Lana Labs as a result of post-integration tax planning and the merger of German subsidiaries.

We assess uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Income Taxes .

As of September 30, 2021, our net unrecognized tax benefits totaled $ 2.3 million, which if recognized would result in no net effect on the effective tax rate due to a valuation allowance.

As of March 31, 2022, our net unrecognized tax benefits totaled $ 3.1 million, which if recognized would result in no net effect on the effective tax rate due to a valuation allowance.

The amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations or settlements of tax audits is not material to our condensed consolidated financial statements.

We file income tax returns in the United States federal jurisdiction and in many states and foreign jurisdictions.

The tax years 2017 through 2020 remain open to examination by the major taxing jurisdictions to which we are subject.

We are not currently under examination by the Internal Revenue Service for any open tax years.

We file income tax returns in the U.S.

federal jurisdiction and in various state and foreign jurisdictions.

Due to our net operating loss (“NOL”) carryforward, the tax years 2016 through 2021 remain open to examination by the major taxing jurisdictions to which we are subject.

There are no open examinations that would have a meaningful impact to our condensed consolidated financial statements.

Stock-Based Compensation

5 unchanged sentences

As a result of the adoption of the 2017 Plan, no further grants may be made under the 2007 Plan.

As of September 30, 2021, there were 7,177,909 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 4,077,122 were available to be issued.

As of March 31, 2022, there were 7,186,749 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 3,749,501 were available to be issued.

Stock Options

We estimate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model, which requires the use of subjective assumptions, including the expected term of the option, the current price of the underlying stock, the expected stock price volatility, expected dividend yield, and the risk-free interest rate for the expected

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

term of the option.

The expected term represents the period of time the stock options are expected to be outstanding.

Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options, we use the simplified method to estimate the expected term for our stock options.

Under the simplified method, the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term.

Under the simplified

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

method, the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term.

Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected term of the stock options.

4 unchanged sentences

The fair value of the 2019 CEO Grant was determined using a Monte Carlo simulation.

The fair value of the award at the grant date was $ 9.5 million and is amortized over the derived service period of 2.6 years.

Effective February 2021, the 2019 CEO Grant has satisfied all of the conditions required to be considered fully vested.

As a result, we accelerated the recognition of approximately $ 3.3 million in stock-based compensation expense in the nine months ended September 30, 2021.

The following table summarizes stock option activity for the nine months ended September 30, 2021:

The fair value of the award at the grant date was $ 9.5 million and was amortized over the derived service period of 2.6 years.

In February 2021, the 2019 CEO Grant satisfied all of the conditions required to be considered fully vested and as a result, we accelerated the recognition of approximately $ 3.3 million in stock-based compensation expense in the three months ended March 31, 2021.

The following table summarizes stock option activity for the three months ended March 31, 2022:

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands)

5 unchanged sentences

Forfeited ( 8,000 ) 12.10 — —

Outstanding at September 30, 2021

Outstanding at March 31, 2022

2,128,943 $ 9.52 4.3 $ 109,212

Exercisable at September 30, 2021

Exercisable at March 31, 2022

1,996,823 $ 9.35 4.2 $ 102,776

There were no stock options granted during the nine months ended September 30, 2021 and 2020.

The total fair value of stock options that vested during the nine months ended September 30, 2021 and 2020 was $ 10.7 million and $ 1.4 million, respectively.

As of September 30, 2021, the total compensation cost related to unvested stock options not yet recognized was $ 0.1 million, which will be recognized over a weighted average period of 0.6 years.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

There were no stock options granted during the three months ended March 31, 2022 and 2021.

The total fair value of stock options that vested during the three months ended March 31, 2022 and 2021 was $ 0.2 million and $ 9.7 million, respectively.

As of March 31, 2022, the total compensation cost related to unvested stock options not yet recognized was nominal and will be recognized over a weighted average period of 0.2 years.

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2021:

The following table summarizes RSU activity for the three months ended March 31, 2022:

Number of Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Forfeited ( 45,053 ) 68.09

Non-vested and outstanding at September 30, 2021

1,235,880 62.67

As of September 30, 2021, total unrecognized compensation cost related to unvested RSUs was appro ximately $ 64.6 million, which will be recognized over a weighted average period of 2.2 years.

The following table summarizes the components of our stock-based compensation expense by instrument type for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Non-vested and outstanding at March 31, 2022

1,340,037 68.86

As of March 31, 2022, total unrecognized compensation cost related to unvested RSUs was appro ximately $ 79.1 million, which will be recognized over a weighted average period of 1.9 years.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the components of our stock-based compensation expense by instrument type for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

RSUs $ 6,786 $ 4,005

2 unchanged sentences

Total stock-based compensation expense $ 6,943 $ 7,894

Stock-based compensation expense for RSUs, stock options, and issuances of common stock to the Board of Directors is included in the following line items in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Stock-based compensation expense for RSUs, stock options, and issuances of common stock to the Board of Directors is included in the following line items in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Cost of revenue

6 unchanged sentences

Total stock-based compensation expense $ 6,943 $ 7,894

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stockholders' Equity

As of September 30, 2021 , we had authorized 500,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each with a par value of $ 0.0001 per share, of which 39,667,317 shares of Class A common stock and 31,499,516 shares of Class B common stock were issued and outstanding.

As of March 31, 2022 , we had authorized 500,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each with a par value of $ 0.0001 per share, of which 40,829,564 shares of Class A common stock and 31,497,796 shares of Class B common stock were issued and outstanding.

The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights.

5 unchanged sentences

The following outstanding securities, prior to the use of the treasury stock method or the if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been antidilutive:

Three and Nine Months Ended September 30,

Three Months Ended March 31,

Stock options 2,128,943 3,309,771

Non-vested restricted stock units 1,340,037 1,125,631

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

11 unchanged sentences

The timing of payments under the agreement may vary, and the total amount of payments may exceed the minimum depending on the volume of services utilized.

Spending under this agreement for the three months ended March 31, 2022 totaled $ 7.8 million.

Exclusive of the AWS contract, we have other non-cancellable agreements for subscription software products that contain provisions stipulating minimum purchase commitments.

However, the annual purchase commitments under these contracts are, individually and in the aggregate, immaterial to our condensed consolidated financial statements.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Letters of Credit

At each of September 30, 2021 and December 31, 2020, we had outstanding letters of credit totaling $ 11.2 million in connection with securing our leased office space.

At each of March 31, 2022 and December 31, 2021, we had outstanding letters of credit totaling $ 11.2 million in connection with securing our leased office space.

All letters of credit are secured by our borrowing arrangement as described in Note 9.

1 unchanged sentence

There are no issues or resolutions of any matters expected to have a material adverse impact on our condensed consolidated financial statements.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment and Geographic Information

2 unchanged sentences

Accordingly, we have determined we have a single reporting segment and operating unit structure.

The following table summarizes revenue by geography for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The following table summarizes revenue by geography for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Domestic $ 76,039 $ 60,282

2 unchanged sentences

With respect to geographic information, revenue is attributed to respective geographies based on the contracting address of the customer.

There were no individual foreign countries from which more than 10% of our total revenue was attributable for the three and nine months ended September 30, 2021.

Revenue from customers attributed to the United Kingdom was 13.6 % and 12.8 % of our total revenue for the three and nine months ended September 30, 2020, respectively.

There were no other individual foreign countries from which more than 10% of our total revenue was attributable for the three and nine months ended September 30, 2020.

Substantially all of our long-lived assets were held in the United States as of September 30, 2021 and December 31, 2020.

There were no individual foreign countries from which more than 10% of our total revenue was attributable for the three months ended March 31, 2022 or 2021.

Substantially all of our long-lived assets were held in the United States as of March 31, 2022 and December 31, 2021.

Investments and Fair Value Measurements

6 unchanged sentences

Unobservable inputs for which there is little or no market data, which require us to develop our own assumptions.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of September 30, 2021 and December 31, 2020.

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of March 31, 2022 and December 31, 2021.

The valuation techniques that may be used to measure fair value are as follows:

2 unchanged sentences

• Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (i.e., replacement cost).

The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of September 30, 2021 and December 31, 2020 because of the relatively short duration of these instruments.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of March 31, 2022 and December 31, 2021 because of the relatively short duration of these instruments.

Our investment portfolio consists largely of debt investments classified as available-for-sale.

Changes in the fair value of available-for-sale securities, excluding other-than-temporary impairments, are recorded in other comprehensive income (loss).

The components of our investments as of September 30, 2021 are as follows (in thousands):

As of September 30, 2021

The components of our investments as of March 31, 2022 are as follows (in thousands):

As of March 31, 2022

Fair Value Measurement Balance Sheet Classification

1 unchanged sentence

Money market fund Level 1 $ 43,555 $ — $ 43,555 $ 43,555 $ — $ —

Treasury bonds Level 1 16,364 2 16,366 — 16,366 —

Treasuries Level 1 7,003 ( 3 ) 7,000 — 7,000 —

Commercial paper Level 2 23,110 — 23,110 — 23,110 —

3 unchanged sentences

At December 31, 2021, our investments consisted of the following (in thousands):

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021

7 unchanged sentences

Total investments $ 105,546 $ ( 22 ) $ 105,524 $ 38,301 $ 55,179 $ 12,044

There were no Level 3 assets held at any point during the three and nine months ended September 30, 2021.

Additionally, there were no transfers between Levels 1 and 2 during the three and nine months ended September 30, 2021.

The amortized cost basis and fair value of debt securities as of September 30, 2021, by contractual maturity, are as follows (in thousands):

As of September 30, 2021

There were no Level 3 assets held at any point during the three months ended March 31, 2022 and 2021.

Additionally, there were no transfers between Levels 1 and 2 during the three and three months ended March 31, 2022 and 2021.

APPIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost basis and fair value of debt securities as of March 31, 2022, by contractual maturity, are as follows (in thousands):

As of March 31, 2022

Cost Basis Fair Value

Due in one year or less $ 97,104 $ 96,993

Due after one year through five years 8,205 8,184

Total investments $ 105,309 $ 105,177

Actual maturities may differ from the contractual maturities in the table above because borrowers have the right to call or prepay certain obligations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements