5 unchanged sentences
Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 17, 2022 and in our other filings with the SEC.
−Removed: You should not rely upon forward-looking statements as predictions of future events.
+Added: Forward-looking statements should not be relied on as predictions of future events.
Furthermore, such forward-looking statements speak only as of the date of this report.
20 unchanged sentences
Generally, our sales team targets its efforts to organizations with over 2,000 employees and $2 billion in annual revenue.
−Removed: Revenue from government agencies represented 18.2% of our total revenue in each of the three and six months ended June 30, 2022.
−Removed: This compares to revenue from government agencies of 19.8% and 20.4% of our total revenue in the three and six months ended June 30, 2021, respectively.
−Removed: No single end-customer accounted for more than 10% of our total revenue in the three and six months ended June 30, 2022 or 2021.
+Added: Revenue from government agencies represented 21.2% and 19.2% of our total revenue for the three and nine months ended September 30, 2022, respectively.
+Added: This compares to revenue from government agencies of 19.2% and 20.0% of our total revenue in the three and nine months ended September 30, 2021, respectively.
+Added: No single end-customer accounted for more than 10% of our total revenue in the three and nine months ended September 30, 2022 or 2021.
We offer our platform globally.
Our platform supports multiple languages to facilitate collaboration and address challenges in multinational organizations.
−Removed: In the three and six months ended June 30, 2022, 35.0% and 34.2%, respectively, of our total revenue was generated from customers outside of the United States as compared to 35.3% and 33.7% in the three and six months ended June 30, 2021, respectively.
−Removed: As of June 30, 2022, we operated in 13 countries.
+Added: In the three and nine months ended September 30, 2022, 31.3% and 33.2% , respectively, of our total revenue was generated from customers outside of the United States as compared to 32.0% and 33.1% in the three and nine months ended September 30, 2021, respectively.
+Added: As of September 30, 2022, we operated in 15 countries.
We believe we have a significant opportunity to continue to grow our international footprint, and we are investing in new geographies, including through investment in direct and indirect sales channels, professional services, and customer support and implementation partners.
Our business model focuses on maximizing the lifetime value of customer relationships, which is a function of the duration of a customer’s deployment of our platform as well as the price and number of subscriptions of our platform that a customer purchases.
−Removed: We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs, all of which, with the exception of sales commissions, are expensed as incurred.
+Added: We incur significant customer acquisition costs, including expenses associated with hiring new sales representatives, who can take anywhere from six months to a year to become productive given the length of our sales cycle, and marketing costs, with the exception of sales commissions, are expensed as incurred.
Key Factors Affecting Our Performance
18 unchanged sentences
Many of our customers begin by building a single application and then grow to build dozens of applications on our platform.
−Removed: Generally, the development of new applications on our platform
−Removed: results in the expansion of our user base within an organization and a corresponding increase in revenue to us because we charge subscription fees on a per-user basis or through non-user based single application licenses.
+Added: Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue.
As a result of this “land and expand” strategy, we have generated significant additional revenue from our customer base.
11 unchanged sentences
As the usage of partners expands, we expect the proportion of our total revenue from subscriptions to increase over time relative to professional services.
−Removed: For the six months ended June 30, 2022 and June 30, 2021 71.5% and 70.2% of our revenue, respectively, was derived from sales of subscriptions while the remaining 28.5% and 29.8%, respectively, was derived from the sale of professional services.
+Added: For the nine months ended September 30, 2022 and 2021, 72.2% and 71.1% of our revenue, respectively, was derived from sales of subscriptions while the remaining 27.8% and 28.9%, respectively, was derived from the sale of professional services.
• Investments in Growth.
5 unchanged sentences
Cloud Subscription Revenue
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 % Change 2022 2021 % Change
1 unchanged sentence
Cloud subscription revenue includes cloud subscriptions bundled with maintenance and support and hosting services.
−Removed: We generally sell our cloud subscriptions on a per-user basis or through non-user based single application licenses.
−Removed: As such, our cloud subscription revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid.
+Added: Our cloud subscription revenue for any customer is primarily determined by the number of users who access and utilize the applications built on our platform or by the number of application licenses purchased, as well as the price paid.
We believe increasing cloud subscription revenue is an indicator of the demand for our platform, the pace at which the market for our solutions is growing, the productivity of our sales team and strategic relationships in growing our customer base, and our ability to further penetrate our existing customer base.
Cloud Subscription Revenue Retention Rate
−Removed: As of June 30,
+Added: As of September 30,
Cloud subscription revenue retention rate 115 % 117 %
19 unchanged sentences
On-premises term license subscriptions are offered when the customer prefers to self-manage the deployment of our platform within their own infrastructure.
−Removed: When our platform is delivered as a cloud subscription, we manage their operational needs in third-party hosted data centers.
+Added: When our platform is delivered as a cloud subscription, we manage operational needs in third-party hosted data centers.
Professional Services
4 unchanged sentences
Cost of subscriptions revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support
−Removed: teams, and allocated overhead costs.
+Added: teams, amortization of developed technology, and allocated overhead costs.
We expect cost of revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows.
1 unchanged sentence
Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, third-party contractor costs, allocated overhead costs, and the costs of billable expenses such as travel and lodging.
−Removed: The unpredictability of the timing of entering into significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our quarterly financial results and allocated overhead costs.
+Added: The unpredictability of the timing of providing services related to significant professional services agreements sold on a standalone basis may cause significant fluctuations in our cost of professional services which, in turn, may impact our quarterly financial results.
Gross Profit and Gross Margin
7 unchanged sentences
Professional services gross margin is also impacted by the amount of services performed by subcontractors and partners as opposed to internal resources.
−Removed: At the outset of the COVID-19 pandemic, we lowered our usage of subcontractors and performed in fewer in-person professional services engagements and deployments, both of which reduced certain classes of expenses and improved professional services margins.
−Removed: In 2021 and continuing into 2022, these margins have declined but remain subject to fluctuation based on the factors discussed above and uncertainties related to the COVID-19 pandemic outside of our control.
+Added: In 2021, we had a lower usage of subcontractors and performed fewer in-person professional services engagements and deployments, both of which reduced certain classes of expenses and improved professional services margins.
+Added: In 2022, these margins have declined but remain subject to fluctuation based on the factors discussed above.
Operating Expenses
1 unchanged sentence
Personnel-related costs such as salaries, bonuses, commissions, payroll tax payments, and stock-based compensation expense are the most significant components of each of these expense categories.
−Removed: Other components of each category include professional fees for third-party services such as contract labor, legal, development resources, and consulting as well as allocated facility and overhead, which can include, among other types of costs, travel and entertainment expenditures, human resources costs such as placement fees, referral bonuses, training costs, and employee relations spending, office-related expenditures, and information technology costs for such items as infrastructure, software, and cloud computing services.
+Added: Other components of each category include professional fees for third-party services such as contract labor, legal, software development resources, and consulting as well as allocated facility and overhead, which can include, among other types of costs, travel and entertainment expenditures, human resources costs such as placement fees, referral bonuses, training costs, and employee relations spending, office-related expenditures, and information technology costs for such items as infrastructure, software, and cloud computing services.
In general, our operating expenses are expected to continue to increase in absolute dollars as we invest resources in growing our various teams.
3 unchanged sentences
In order to continue to grow our business, geographical footprint, and brand awareness, we expect to continue investing resources in sales and marketing by increasing the number of sales and account management teams.
−Removed: Additionally, as the COVID-19 pandemic improves and certain restrictions are loosened, we would expect certain classes of expense such as travel and entertainment and in-person marketing events to increase relative to recent years.
+Added: Additionally, we expect certain classes of expense such as travel and entertainment and in-person marketing events to increase relative to recent years.
As a result, we expect sales and marketing expense to increase in absolute dollars as we continue to invest to acquire new customers and further expand usage of our platform within our existing customer base.
6 unchanged sentences
General and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and other personnel costs for our administrative, legal, information technology, human resources, finance, and accounting, as well as our senior executives.
−Removed: Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, bad debt expenses, and amortization of intangible assets.
+Added: Additional expenses included in this category are non-personnel costs such as travel-related expenses, contracting and professional fees for such services as audits, taxation, and legal, insurance and other corporate expenses, including allocated overhead costs, and bad debt expenses.
Absent certain non-recurring legal expenses incurred in 2022 and prior years, we expect our general and administrative expense to increase in absolute dollars as we continue to support our growth.
6 unchanged sentences
The following table sets forth our consolidated statements of operations data (in thousands):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
18 unchanged sentences
Operating loss (37,776) (22,897) (104,390) (57,963)
−Removed: Other non-operating expense (income)
−Removed: Other expense (income), net 6,153 (1,081) 6,940 1,812
+Added: Other non-operating expense
+Added: Other expense, net 5,876 2,329 12,815 4,141
Interest expense 89 72 222 233
−Removed: Total other non-operating expense (income) 6,213 (1,001) 7,074 1,973
+Added: Total other non-operating expense 5,965 2,401 13,037 4,374
Loss before income taxes (43,741) (25,298) (117,427) (62,337)
2 unchanged sentences
(1) Stock-based compensation as a component of these line items is as follows:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
8 unchanged sentences
The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
13 unchanged sentences
Operating loss (32.0) (24.8) (30.5) (21.9)
−Removed: Other non-operating expense (income)
−Removed: Other expense (income), net 5.6 (1.3) 3.1 1.1
+Added: Other non-operating expense
+Added: Other expense, net 5.0 2.5 3.7 1.6
Interest expense 0.1 0.1 0.1 0.1
−Removed: Total other non-operating expense (income) 5.6 (1.2) 3.2 1.1
+Added: Total other non-operating expense 5.1 2.6 3.8 1.7
Loss before income taxes (37.1) (27.4) (34.3) (23.6)
1 unchanged sentence
Net loss (37.3) % (27.5) % (34.0) % (23.8) %
−Removed: Comparison of the Three Months Ended June 30, 2022 and 2021
−Removed: Three Months Ended June 30,
+Added: Comparison of the Three Months Ended September 30, 2022 and 2021
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
3 unchanged sentences
Total revenue $ 117,876 $ 92,417 $ 25,459 27.5 %
−Removed: Total revenue increased $27.1 million, or 32.6%, in the three months ended June 30, 2022 compared to the same period in 2021 due to an increase in our subscriptions revenue of $19.7 million and an increase in our professional services revenue of $7.3 million.
−Removed: The increase in subscriptions revenue was driven largely by a $14.6 million increase in cloud subscription revenue and a $4.7 million increase in on-premises subscription revenue.
+Added: Total revenue increased $25.5 million , or 27.5% , in the three months ended September 30, 2022 compared to the same period in 2021 due to an increase in our subscriptions revenue of $19.3 million and an increase in our professional services revenue of $6.2 million .
+Added: The increase in subscriptions revenue was driven by a $13.9 million increase in cloud subscription revenue, a $4.7 million increase in on-premises subscription revenue, and a $0.7 million increase in maintenance and support revenue.
With respect to new versus existing customers, there was a $14.1 million increase in subscriptions revenue stemming from expanded deployments and corresponding sales of additional subscriptions to existing customers while $5.1 million of the increase was the result of sales of subscriptions to new customers.
−Removed: The remainder of the increase is attributable to revenue recognized from Lana Labs.
−Removed: The increase in professional services revenue was due primarily to a $7.9 million increase in sales to new customers, which was partially offset by a $0.6 million decrease in revenue from existing customers.
−Removed: Professional services revenue was also impacted by the level of usage of partners to perform professional services in the three months ended June 30, 2022 as compared to the same period in 2021.
+Added: The increase in professional services revenue was due
+Added: primarily to a $5.2 million increase in sales to new customers, coupled with a $0.9 million increase in revenue from existing customers.
Cost of Revenue
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
7 unchanged sentences
Total gross margin 71.4 % 71.3 %
−Removed: Cost of revenue increased $7.5 million, or 28.9%, in the three months ended June 30, 2022 compared to the same period in 2021, primarily due to a $4.8 million increase in professional services and product support personnel costs, a $0.9 million increase in hosting costs, a $0.7 million increase in contractor costs, a $0.6 million increase in overhead costs, and a $0.5 million increase in travel and entertainment expenses.
−Removed: Personnel costs increased due to an increase in professional services and product support personnel headcount of 17.0% from June 30, 2021 to June 30, 2022, coupled with a $0.4 million increase in stock-based compensation.
−Removed: Hosting costs increased as sales of our cloud offering increased in the three months ended June 30, 2022.
−Removed: Contractor costs increased in the three months ended June 30, 2022 compared to the same period in 2021 due to an increase in the usage of subcontractors and consultants for professional services engagements.
−Removed: The increase in overhead costs was due largely to an increase in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
−Removed: Subscriptions gross margin slightly increased to 88.9% for the three months ended June 30, 2022 compared to 88.0% in the same period in 2021 due to an increase in subscriptions revenue during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.
−Removed: This increase was partially offset by an increase in hosting costs as sales of our cloud offering increased and became a larger proportion of our overall subscriptions revenue.
−Removed: Professional services gross margin decreased to 25.8% for the three months ended June 30, 2022 compared to 27.2% in the same period in 2021 due largely to higher personnel and other allocated costs such as human resources, information technology, and office-related spending in the comparable periods, partially offset by an increase in professional services revenue.
−Removed: Furthermore, fewer in-person professional services engagements and deployments during the three months ended June 30, 2021 as compared to the three months ended June 30, 2022 led to temporarily improved margins in the prior year.
−Removed: Gross margin rose slightly to 69.8% in the three months ended June 30, 2022 as compared to 68.9% in the same period in 2021, due largely to the increase in professional services revenue and improved subscriptions margins.
+Added: Cost of revenue increased $7.3 million, or 27.4%, in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to a $3.7 million increase in professional services and product support personnel costs, a $1.5 million increase in hosting costs, a $1.3 million increase in contractor costs, and a $0.6 million increase in travel and entertainment expenses.
+Added: Personnel costs increased due to an increase in professional services and product support personnel headcount of 15.9% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, coupled with a $0.5 million increase in stock-based compensation expense.
+Added: Hosting costs increased as sales of our cloud offering increased in the three months ended September 30, 2022.
+Added: Contractor costs increased in the three months ended September 30, 2022 compared to the same period in 2021 due to an increase in the usage of subcontractors and consultants for professional services engagements.
+Added: Subscriptions gross margin slightly decreased to 89.2% for the three months ended September 30, 2022 compared to 89.5% in the same period in 2021 due to increased hosting costs as sales of our cloud offering increased.
+Added: However, this increase in hosting costs was partially offset by an increase in subscriptions revenue during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.
+Added: Professional services gross margin decreased to 22.0% for the three months ended September 30, 2022 compared to 22.9% in the same period in 2021 due largely to higher personnel and other allocated costs such as human resources, information technology, and office-related spending in the comparable periods, partially offset by an increase in professional services revenue.
+Added: Furthermore, fewer in-person professional services engagements and deployments during the three months ended September 30, 2021 as compared to the three months ended September 30, 2022 led to temporarily improved margins in the prior year.
+Added: Gross margin increased slightly to 71.4% for the three months ended September 30, 2022 compared to 71.3% for the three months ended September 30, 2021.
Sales and Marketing Expense
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 46.6 % 45.5 %
−Removed: Sales and marketing expense increased $15.6 million, or 38.6%, in the three months ended June 30, 2022 compared to the same period in 2021, primarily due to an $8.0 million increase in sales and marketing personnel costs, a $4.4 million increase in marketing costs, and a $3.4 million increase in overhead costs, which were partially offset by a $0.2 million decrease in professional fees.
−Removed: Personnel costs increased due to an increase in sales and marketing personnel headcount of 19.2% from June 30, 2021 to June 30, 2022, a $1.2 million increase in commissions expense due to increased sales, and a $1.1 million increase in stock-based compensation expense.
−Removed: Marketing costs increased due to an increase in the number of marketing events held during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, including spending on
−Removed: our annual user conference Appian World, which resumed its in-person format in April 2022.
−Removed: Additionally, marketing costs increased due to an increase in spending on advertising campaigns.
+Added: Sales and marketing expense increased $12.8 million, or 30.5%, in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to a $8.4 million increase in sales and marketing personnel costs, a $5.0 million increase in overhead costs, and a $0.4 million increase in marketing costs, which were partially offset by a $0.9 million decrease in professional fees.
+Added: Personnel costs increased due to an increase in sales and marketing personnel headcount of 24.5% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, a $1.3 million increase in
+Added: commissions expense due to increased sales, and a $1.2 million increase in stock-based compensation expense.
Overhead costs increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
−Removed: Additionally, travel and entertainment expenses increased due to a higher number of in-person engagements and events relative to the prior year.
+Added: Additionally, travel and entertainment expense increased due to a higher number of in-person engagements and events as compared to the prior year.
+Added: Marketing costs increased due to an increase in advertising expense stemming from an increase in the number of advertising campaigns launched in the three months ended September 30, 2022 relative to the three months ended September 30, 2021.
Professional fees decreased due to a decrease in the use of third-party sales and marketing consultants for certain initiatives.
Research and Development Expense
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 31.9 % 28.7 %
−Removed: Research and development expense increased $10.0 million, or 41.8%, in the three months ended June 30, 2022 compared to the same period in 2021, primarily due to an $8.5 million increase in research and development personnel costs, a $1.4 million increase in overhead costs, and a $0.1 million increase in professional fees.
−Removed: Personnel costs increased due to an increase in research and development personnel headcount of 32.2% from June 30, 2021 to June 30, 2022, coupled with a $2.0 million increase in stock-based compensation expense.
+Added: Research and development expense increased $11.1 million, or 41.9%, in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to a $9.3 million increase in research and development personnel costs, a $1.4 million increase in overhead costs, and a $0.4 million increase in professional fees.
+Added: Personnel costs increased due to an increase in research and development personnel headcount of 25.6% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, coupled with a $2.2 million increase in stock-based compensation expense.
Overhead costs increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
1 unchanged sentence
General and Administrative Expense
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 24.9 % 21.9 %
−Removed: General and administrative expense increased $12.2 million, or 70.0%, in the three months ended June 30, 2022 compared to the same period in 2021, primarily due to a $6.2 million increase in professional fees, a $3.2 million increase in overhead costs, and a $2.7 million increase in general and administrative personnel costs.
−Removed: Professional fees increased due to higher legal fees incurred in connection with two separate lawsuits, one involving an effort to enforce our intellectual property and one involving reciprocal false advertising and related claims with a competitor.
−Removed: Refer to Item 1.
−Removed: Legal Proceedings, within Part II of this Form 10-Q for further information.
+Added: General and administrative expense increased $9.1 million, or 45.1%, in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to a $6.6 million increase in general and administrative personnel costs and a $2.8 million increase in overhead costs, both of which were partially offset by a $0.3 million decrease in professional fees.
+Added: Personnel costs increased due to an increase in general and administrative personnel headcount of 38.2% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, as well as a $2.2 million increase in stock-based compensation expense.
Overhead costs increased primarily due to an increase in certain allocated costs tied to our growth such as insurance premiums, information technology spending, human resources costs, and office-related expenses.
−Removed: Personnel costs increased due to an increase in general and administrative personnel headcount of 27.4% from June 30, 2021 to June 30, 2022 as well as a $1.1 million increase in stock-based compensation.
−Removed: Other Non-Operating Expense (Income), Net
−Removed: Three Months Ended June 30,
+Added: Professional fees decreased due to a $2.1 million decline in legal fees incurred relative to the three months ended September 30, 2021, which was substantially offset by a $1.7 million increase in consulting fees.
+Added: Other Non-Operating Expense, Net
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
(dollars in thousands)
−Removed: Other expense (income), net $ 6,153 $ (1,081) $ 7,234 ***
+Added: Other expense, net $ 5,876 $ 2,329 $ 3,547 ***
% of revenue 5.0 % 2.5 %
*** Indicates a percentage that is not meaningful.
−Removed: Other expense (income), net was $6.2 million in the three months ended June 30, 2022 compared to other income, net of $1.1 million in the three months ended June 30, 2021.
−Removed: This change was primarily due to $6.5 million in foreign exchange losses in the three months ended June 30, 2022 as compared to $1.0 million in foreign exchange gains in the three months ended June 30, 2021.
+Added: Other expense, net was $5.9 million in the three months ended September 30, 2022 compared to other expense, net of $2.3 million in the three months ended September 30, 2021.
+Added: This change was primarily due to $6.1 million in foreign exchange losses in the three months ended September 30, 2022 as compared to $2.3 million in foreign exchange losses in the three months ended September 30, 2021.
The primary reason for the increase in foreign exchange losses was the strengthening of the U.S.
1 unchanged sentence
Interest Expense
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 0.1 % 0.1 %
−Removed: Interest expense decreased by a nominal amount in the three months ended June 30, 2022 compared to the same period in 2021, primarily due to lower commitment fees on the letters of credit outstanding.
−Removed: Comparison of the Six Months Ended June 30, 2022 and 2021
−Removed: Six Months Ended June 30,
+Added: Interest expense increased by a nominal amount in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to slightly higher commitment fees on the letters of credit outstanding.
+Added: Comparison of the Nine Months Ended September 30, 2022 and 2021
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
3 unchanged sentences
Total revenue $ 342,205 $ 264,271 $ 77,934 29.5 %
−Removed: Total revenue increased $52.5 million, or 30.5%, in the six months ended June 30, 2022 compared to the same period in 2021 due to an increase in our subscriptions revenue of $39.7 million and an increase in our professional services revenue of $12.8 million.
−Removed: The increase in subscriptions revenue was driven largely by a $28.9 million increase in cloud subscription revenue, a $9.6 million increase in on-premises subscription revenue, and a $1.2 million increase in maintenance and support revenues.
+Added: Total revenue increased $77.9 million , or 29.5% , in the nine months ended September 30, 2022 compared to the same period in 2021 due to an increase in our subscriptions revenue of $59.0 million and an increase in our professional services revenue of $19.0 million.
+Added: The increase in subscriptions revenue was driven largely by a $42.8 million increase in cloud subscription revenue, a $14.3 million increase in on-premises subscription revenue, and a $1.9 million increase in maintenance and support revenue.
With respect to new versus existing customers, there was a $46.4 million increase in subscriptions revenue stemming from expanded deployments and corresponding sales of additional subscriptions to existing customers while $12.3 million of the increase was the result of sales of subscriptions to new customers.
−Removed: The remainder of the increase is attributable to revenue recognized from Lana Labs.
−Removed: The increase in professional services revenue was due primarily to a $13.9 million increase in sales to new customers, which was partially offset by a $1.1 million decrease in revenue from existing customers.
−Removed: Professional services revenue was also impacted by the level of usage of partners to perform professional services in the six months ended June 30, 2022 as compared to the same period in 2021.
+Added: The increase in professional services revenue was due primarily to a $14.8 million increase in sales to new customers, in addition to a $4.2 million increase in revenue from existing customers.
Cost of Revenue
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
7 unchanged sentences
Total gross margin 71.3 % 71.3 %
−Removed: Cost of revenue increased $15.0 million, or 30.3%, in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to a $9.9 million increase in professional services and product support personnel costs, a $2.5 million increase in hosting costs, a $1.1 million increase in overhead costs, a $0.8 million increase in contractor costs, and a $0.6 million increase in travel and entertainment expenses.
−Removed: Personnel costs increased due to an increase in professional services and product support personnel headcount of 17.0% from June 30, 2021 to June 30, 2022, coupled with a $0.7 million increase in stock-based compensation.
−Removed: Hosting costs increased as sales of our cloud offering increased in the six months ended June 30, 2022.
+Added: Cost of revenue increased $22.2 million, or 29.3%, in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to a $13.6 million increase in professional services and product support personnel costs, a $4.0 million increase in hosting costs, a $2.2 million increase in contractor costs, a $1.2 million increase in travel and entertainment expenses, and a $1.2 million increase in overhead costs.
+Added: Personnel costs increased due to an increase in professional services and product support personnel headcount of 15.9% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, coupled with a $1.2 million increase in stock-based compensation.
+Added: Hosting costs increased as sales of our cloud offering increased in the nine months ended September 30, 2022.
+Added: Contractor costs increased in the nine months ended September 30, 2022 compared to the same period in 2021 due to an increase in the usage of subcontractors and consultants for professional services engagements.
+Added: Travel and entertainment expenses increased due to a larger number of in-person engagements, events, and other business-related traveling.
The increase in overhead costs was due largely to an increase in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
−Removed: Contractor costs increased in the six months ended June 30, 2022 compared to the same period in 2021 due to an increase in the usage of subcontractors and consultants for professional services engagements.
−Removed: Subscriptions gross margin was 89.6% for the six months ended June 30, 2022, consistent with a margin of 89.5% in the same period in 2021.
−Removed: As sales of our cloud offering increased and became a larger proportion of our overall subscriptions revenue, hosting costs increased.
−Removed: However, this increase in hosting costs was offset by an increase in subscriptions revenue.
−Removed: Professional services gross margin decreased to 25.6% for the six months ended June 30, 2022 compared to 28.3% in the same period in 2021 due largely to higher personnel and human resources costs in the current year, partially offset by an increase in professional services revenue.
−Removed: Furthermore, fewer in-person professional services engagements and deployments during the six months ended June 30, 2021 as compared to the six months ended June 30, 2022 led to temporarily improved margins in the prior year.
−Removed: Based on the above offsetting factors, gross margin remained consistent at 71.3% for both the six months ended June 30, 2022 and June 30, 2021.
+Added: Subscriptions gross margin was 89.4% for nine months ended September 30, 2022 as compared to 89.5% for the nine months ended September 30, 2021.
+Added: Revenue from our cloud offering increased and became a larger proportion of our overall subscriptions revenue.
+Added: However, the increase in revenue was offset by increased hosting costs.
+Added: Professional services gross margin decreased to 24.4% for the nine months ended September 30, 2022 compared to 26.5% in the same period in 2021 due largely to higher personnel and human resources costs in the current year, partially offset by an increase in professional services revenue.
+Added: Furthermore, fewer in-person professional services engagements and deployments during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2022 led to temporarily improved margins in the prior year.
+Added: Based on the above offsetting factors, gross margin remained consistent at 71.3% for the nine months ended September 30, 2022 and 2021.
Sales and Marketing Expense
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 45.9 % 44.9 %
−Removed: Sales and marketing expense increased $25.7 million, or 33.6%, in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to a $15.0 million increase in sales and marketing personnel costs, a $6.3 million increase in overhead costs, and a $5.1 million increase in marketing costs, which were partially offset by a $0.7 million decrease in professional fees.
−Removed: Personnel costs increased due to an increase in sales and marketing personnel headcount of 19.2% from June 30, 2021 to June 30, 2022, increased sales commissions driven by our revenue growth, and a $1.7 million increase in stock-based compensation expense.
−Removed: Overhead costs increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
+Added: Sales and marketing expense increased $38.5 million, or 32.5%, in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to a $23.4 million increase in sales and marketing personnel costs, an $11.3 million increase in overhead costs, and a $5.5 million increase in marketing costs, which were partially offset by a $1.6 million decrease in professional fees.
+Added: Personnel costs increased due to an increase in sales and marketing personnel headcount of 24.5% from September 30, 2021 to September 30, 2022, in addition to increased wages and fringe benefits, increased sales commissions driven by our revenue growth, and a $3.0 million increase in stock-based compensation expense.
+Added: Overhead costs
+Added: increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
Additionally, travel and entertainment expenses increased due to a higher number of in-person engagements and events relative to the prior year.
−Removed: Marketing costs increased due to an increase in the number of marketing events held during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, including spending on our annual user conference Appian World, which
−Removed: resumed its in-person format in April 2022.
+Added: Marketing costs increased due to an increase in the number of marketing events held during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, including spending on our annual user conference Appian World, which resumed its in-person format in April 2022.
Additionally, marketing costs increased due to an increase in spending on advertising campaigns.
1 unchanged sentence
Research and Development Expense
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 29.6 % 26.9 %
−Removed: Research and development expense increased $19.2 million, or 43.2%, in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to a $15.8 million increase in research and development personnel costs, a $2.5 million increase in overhead costs, and a $0.8 million increase in professional fees.
−Removed: Personnel costs increased due to an increase in research and development personnel headcount of 32.2% from June 30, 2021 to June 30, 2022, coupled with a $3.3 million increase in stock-based compensation expense.
+Added: Research and development expense increased $30.3 million, or 42.7%, in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to a $25.1 million increase in research and development personnel costs, a $3.9 million increase in overhead costs, and a $1.3 million increase in professional fees.
+Added: Personnel costs increased due to an increase in research and development personnel headcount of 25.6% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits, coupled with a $5.5 million increase in stock-based compensation expense.
Overhead costs increased due to increases in certain allocated costs tied directly to our growth such as spending for offices, human resources costs, and information technology infrastructure.
1 unchanged sentence
General and Administrative Expense
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 26.3 % 21.5 %
−Removed: General and administrative expense increased $24.2 million, or 66.2%, in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to a $16.9 million increase in professional fees, a $6.0 million increase in overhead costs, and a $1.2 million increase in general and administrative personnel costs.
−Removed: Professional fees increased due to higher legal fees incurred in connection with two separate lawsuits, one involving an effort to enforce our intellectual property and one involving reciprocal false advertising and related claims with a competitor.
+Added: General and administrative expense increased $33.3 million, or 58.7%, in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to a $16.6 million increase in professional fees, an $8.8 million increase in overhead costs, and a $7.8 million increase in general and administrative personnel costs.
+Added: Professional fees increased due to higher legal fees incurred in connection with two separate lawsuits, one involving an effort to enforce our intellectual property rights and one involving reciprocal false advertising and related claims with a competitor.
Refer to Item 1.
1 unchanged sentence
Overhead costs increased primarily due to an increase in certain allocated costs tied to our growth such as insurance premiums, information technology spending, human resources costs, and office-related expenses.
−Removed: Personnel costs increased due to an increase in general and administrative personnel headcount of 27.4% from June 30, 2021 to June 30, 2022.
−Removed: This increase was partially offset by a $2.2 million decrease in stock-based compensation, driven by the accelerated recognition of expense pursuant to the vesting of the 2019 CEO grant during the six months ended June 30, 2021.
+Added: Personnel costs increased due to an increase in general and administrative personnel headcount of 38.2% from September 30, 2021 to September 30, 2022 in addition to increased wages and fringe benefits.
Other Non-Operating Expense, Net
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
3 unchanged sentences
*** Indicates a percentage that is not meaningful.
−Removed: Other expense, net was $6.9 million in the six months ended June 30, 2022 compared to other expense, net of $1.8 million in the six months ended June 30, 2021.
−Removed: This change was primarily due to $8.4 million in foreign exchange losses in the six
−Removed: months ended June 30, 2022 as compared to $2.0 million in foreign exchange losses in the six months ended June 30, 2021.
+Added: Other expense, net was $12.8 million in the nine months ended September 30, 2022 compared to other expense, net of $4.1 million in the nine months ended September 30, 2021.
+Added: This change was primarily due to $14.5 million in foreign exchange losses in the nine months ended September 30, 2022 as compared to $4.3 million in foreign exchange losses in the nine months ended September 30, 2021.
The primary reason for the increase in foreign exchange losses was the strengthening of the U.S.
1 unchanged sentence
Interest Expense
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
2 unchanged sentences
% of revenue 0.1 % 0.1 %
−Removed: Interest expense decreased by a nominal amount in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to lower commitment fees on the letters of credit outstanding.
+Added: Interest expense decreased by a nominal amount in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to lower commitment fees on the letters of credit outstanding.
Liquidity and Capital Resources
−Removed: The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of June 30, 2022 and December 31, 2021:
−Removed: June 30, 2022 December 31, 2021
+Added: The following table presents selected financial information and statistics pertaining to liquidity and capital resources as of September 30, 2022 and December 31, 2021:
+Added: September 30, 2022 December 31, 2021
Cash and cash equivalents $ 51,802 $ 100,796
4 unchanged sentences
* Defined as current assets net of current liabilities, excluding the current portion of restricted cash
−Removed: As of June 30, 2022, we had $76.2 million of cash and cash equivalents and $59.7 million of short-term investments and marketable securities.
+Added: As of September 30, 2022, we had $51.8 million of cash and cash equivalents and $40.9 million of short-term investments and marketable securities.
We believe our existing cash and cash equivalents and short-term investments and marketable securities, together with any positive cash flows from operations and available borrowings under our line of credit, will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
−Removed: We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services.
−Removed: We may also elect to raise additional sources of funding through draws on our existing line of credit, entering into new debt financing arrangements, or conducting additional public offerings.
−Removed: Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our applications.
−Removed: In the event additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all.
−Removed: To the extent existing cash and cash equivalents, short-term investments and cash from operations are not sufficient to fund future activities, we may need to raise additional funds.
−Removed: We may seek to raise additional funds through equity, equity-linked, or debt financings.
−Removed: If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict operations.
−Removed: Any additional equity financing may be dilutive to our existing stockholders.
We recently have, and in the future may enter into, investments in or acquisitions of complementary businesses, products, or technologies, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources.
−Removed: We have no present binding agreements or commitments to enter into any such acquisitions.
+Added: have no present binding agreements or commitments to enter into any such acquisitions.
If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.
2 unchanged sentences
In addition, we have financed our operations through sales of subscriptions and professional services.
−Removed: We have a $20.0 million revolving line of credit with a lender that matures in November 2025.
−Removed: 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.
−Removed: We were in compliance with all covenants as of June 30, 2022.
−Removed: As of June 30, 2022, we had no outstanding borrowings under this revolving line of credit, and we had outstanding letters of credit totaling $11.0 million in connection with securing our leased office space.
+Added: As of September 30, 2022, we had a $20.0 million revolving line of credit with a lender, and as of that date, we had no outstanding borrowings and were in compliance with all covenants.
+Added: To further help strengthen our financial position and support our growth initiatives, on November 3, 2022, we entered into a new Senior Secured Credit Facilities Credit Agreement (the “Credit Agreement”) which provides for a five-year term loan facility in an aggregate principal amount of $100.0 million and, in addition, up to $50.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $15.0 million and a swingline sub-facility in the aggregate availability amount of $10.0 million (as a sublimit of the revolving loan facility).
+Added: The new Credit Agreement matures on November 3, 2027.
+Added: We will use the proceeds from the $100.0 million term loan to fund the continued growth of our business and support our working capital requirements.
+Added: The new Credit Agreement replaces our existing Line of Credit that was in place as of September 30, 2022.
+Added: We expect future sources of funds to consist primarily of cash generated from sales of subscriptions and the related professional services.
+Added: We may also elect to raise additional sources of funding through draws on our new revolving credit facility, entering into new debt financing arrangements, or conducting additional public offerings.
+Added: Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and functions as well as platform enhancements and professional services offerings, and the level of market acceptance of our applications.
Uses of Funds
3 unchanged sentences
However, as we continue to invest in growing our business, operating expenses have also increased.
−Removed: Outside of cash used in operations, other uses of cash in 2022 to date have included capital expenditures related to the expansion of our headquarters.
−Removed: Non-operating cash uses in the prior year through June 30, 2021 also consisted primarily of modest capital expenditures.
+Added: Outside of cash used in operations, other uses of cash in 2022 to date have included capital expenditures related to the expansion of our headquarters and purchases of short-term investments.
+Added: Non-operating cash uses in the prior year through September 30, 2021 consisted primarily of the acquisition of Lana Labs and modest capital expenditures.
Furthermore, in 2021 we executed a non-cancellable cloud hosting arrangement with Amazon Web Services that contains provisions for minimum purchase commitments.
1 unchanged sentence
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.
−Removed: Spending under this agreement for the six months ended June 30, 2022 totaled $15.9 million.
+Added: Spending under this agreement for the nine months ended September 30, 2022 totaled $24.8 million.
Historical Cash Flows
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2022 2021 $ Change % Change
15 unchanged sentences
Operating Activities
−Removed: Net cash used by operating activities was $50.3 million for the six months ended June 30, 2022 as compared to $9.4 million used by operating activities for the six months ended June 30, 2021.
−Removed: The increase in net cash used by operating activities was primarily due to a $35.1 million increase in net losses, most notably driven by the increase in operating expenses as discussed above.
−Removed: In addition, the increase in cash used by operating activities for the six months ended June 30, 2022 was attributed to a decline in cash flows from working capital of $9.2 million.
−Removed: This change from working capital is comprised primarily of a $7.7 million decrease in accrued compensation and related benefits and a $5.6 million increase in prepaid expenses and other assets was driven by higher prepayments under the AWS cloud hosting arrangement.
+Added: Net cash used by operating activities was $94.0 million for the nine months ended September 30, 2022 as compared to $34.5 million used by operating activities for the nine months ended September 30, 2021.
+Added: The increase in net cas h used by operating activities was primarily due to a $53.7 million increase in net losses, most notably driven by the increase in operating expenses as discussed above.
+Added: In addition, the increase in cash used by operating activities for the nine months ended September 30, 2022 was attributed to a decline in cash flows from working capital of $16.2 million .
+Added: This change in working capital is comprised primarily of a $14.5 million decrease in accounts payable and accrued expenses due to timing, a $9.5 million increase in prepaid expenses and other assets driven by higher prepayments under the AWS cloud hosting arrangement, and a $3.2 million decrease in other current and non-current liabilities due in part to the decrease in the escrow liability related to the Lana Labs acquisition.
Investing Activities
−Removed: Net cash provided by investing activities was $0.6 million for the six months ended June 30, 2022 as compared to $26.6 million provided by investing activities for the six months ended June 30, 2021.
−Removed: The decrease in net cash provided by investing activities was primarily due to $31.2 million in purchases of investments for the six months ended June 30, 2022 and a $3.7 million increase in capital expenditures year over year, partially offset by an $8.9 million increase in proceeds from the sale of investments.
+Added: Net cash provided by investing activities was $20.3 million for the nine months ended September 30, 2022 as compared to $51.4 million provided by investing activities for the nine months ended September 30, 2021.
+Added: Net cash provided by investing activities was primarily impacted by $31.2 million increase in purchases of investments during the nine months ended September 30, 2022, a $3.4 million increase in capital expenditures, and a $27.2 million decrease in proceeds from the sale of investments.
+Added: Partially offsetting these increases was a $30.7 million decrease in payments for business acquisitions due to the August 2021 acquisition of Lana Labs.
Financing Activities
−Removed: Net cash provided by financing activities was $25.0 million for the six months ended June 30, 2022 as compared to $2.1 million provided by financing activities for the six months ended June 30, 2021.
−Removed: The increase in net cash provided by financing activities was primarily due to $23.8 million in proceeds received from the exercise of the 2019 CEO stock option during the six months ended June 30, 2022.
+Added: Net cash provided by financing activities was $25.2 million for the nine months ended September 30, 2022 as compared to $2.4 million provided by financing activities for the nine months ended September 30, 2021.
+Added: The increase in net cash provided by financing activities was primarily due to $23.8 million in proceeds received from the exercise of the 2019 CEO stock option during the nine months ended September 30, 2022.
Critical Accounting Estimates
4 unchanged sentences
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.