What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-03 · 177 added, 273 removed, 427 unchanged (51% of the section changed)

3 unchanged sentences

(in thousands, except par value and share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets

9 unchanged sentences

45,877 41,855

Long-term investments — 12,044

Goodwill 26,711 26,349

3 unchanged sentences

Deferred tax assets 1,596 1,940

Restricted cash, net of current portion — 2,373

Other assets 3,064 3,286

5 unchanged sentences

Accrued compensation and related benefits 31,443 40,718

Deferred revenue, current 161,154 150,169

Operating lease liabilities, current 7,434 8,110

Deferred revenue 193,902 194,768

Debt 65,432 2,740

Operating lease liabilities 8,980 8,681

Other current liabilities 4,763 3,121

Total current liabilities 323,765 270,252

Operating lease liabilities, net of current portion 52,710 48,784

Deferred revenue, net of current portion 3,408 2,430

Long-term debt 143,728 115,379

Operating lease liabilities 56,073 57,225

Deferred revenue 4,750 5,556

Deferred tax liabilities 103 102

Other non-current liabilities 956 3,458

Total liabilities 528,419 448,514

1 unchanged sentence

Class A common stock—par value $ 0.0001 ;

500,000,000 shares authorized and 41,043,099 shares issued and outstanding as of September 30, 2022;

500,000,000 shares authorized and 41,457,783 shares issued and outstanding as of March 31, 2023;

500,000,000 shares authorized and 41,320,091 shares issued and outstanding as of December 31, 2022

Class B common stock—par value $ 0.0001 ;

100,000,000 shares authorized and 31,497,796 shares issued and outstanding as of September 30, 2022;

100,000,000 shares authorized and 31,497,596 shares issued and outstanding as of March 31, 2023;

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

8 unchanged sentences

(unaudited, in thousands, except per share data)

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

2022 2021 2022 2021

Three Months Ended March 31,

Subscriptions $ 98,957 $ 83,720

13 unchanged sentences

Other non-operating expense

Other expense, net 5,876 2,329 12,815 4,141

Other (income) expense, net ( 2,690 ) 787

Interest expense 3,118 74

11 unchanged sentences

(unaudited, in thousands)

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

2022 2021 2022 2021

Three Months Ended March 31,

Net loss $ ( 36,829 ) $ ( 23,154 )

Comprehensive income (loss), net of income taxes

Comprehensive loss, net of income taxes

Foreign currency translation adjustments ( 746 ) 757

5 unchanged sentences

(unaudited, in thousands, except share data)

Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity

Common Stock Additional Paid-In Capital Accumulated Deficit

Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Shares Amount

Balance, December 31, 2022

72,817,887 $ 7 $ 561,390 $ ( 7,246 ) $ ( 408,451 ) $ 145,700

Net loss — — — — ( 36,829 ) ( 36,829 )

3 unchanged sentences

Stock-based compensation expense — — 11,056 — — 11,056

Other comprehensive income — — — 646 — 646

Other comprehensive loss — — — ( 700 ) — ( 700 )

Balance, March 31, 2023

Net loss — — — — ( 49,354 ) ( 49,354 )

Issuance of common stock to directors 2,565 — — — — —

Vesting of restricted stock units 52,634 — — — — —

Exercise of stock options 61,955 — 626 — — 626

Stock-based compensation expense — — 9,148 — — 9,148

Other comprehensive income — — — 1,884 — 1,884

Balance, June 30, 2022 72,444,514 7 538,249 ( 3,157 ) ( 330,039 ) 205,060

Net loss — — — — ( 43,996 ) ( 43,996 )

Issuance of common stock to directors 4,613 — — — — —

Vesting of restricted stock units 67,164 — — — — —

Exercise of stock options 24,604 — 175 — — 175

Stock-based compensation expense — — 11,336 — — 11,336

Other comprehensive income — — — 367 — 367

Balance, September 30, 2022 72,540,895 $ 7 $ 549,760 $ ( 2,790 ) $ ( 374,035 ) $ 172,942

APPIAN CORPORATION

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

72,955,379 $ 7 $ 569,618 $ ( 7,946 ) $ ( 445,280 ) $ 116,399

Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Shares Amount

Balance, December 31, 2021

71,462,094 $ 7 $ 497,128 $ ( 5,687 ) $ ( 257,531 ) $ 233,917

Net loss — — — — ( 23,154 ) ( 23,154 )

5 unchanged sentences

Balance, March 31, 2022

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 loss — — — 28 — 28

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

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

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

2 unchanged sentences

(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

4 unchanged sentences

Bad debt expense 120 ( 2 )

Loss on disposal of property and equipment — 78

Change in fair value of available-for-sale securities — ( 31 )

Amortization of debt issuance costs 70 —

Deferred income taxes 357 ( 1,073 )

7 unchanged sentences

Deferred revenue ( 2,177 ) ( 3,764 )

Operating lease liabilities ( 685 ) ( 476 )

Operating lease assets and liabilities 969 ( 450 )

Net cash used by operating activities ( 25,265 ) ( 20,604 )

2 unchanged sentences

Proceeds from investments 16,289 21,729

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

Purchases of property and equipment ( 4,421 ) ( 3,390 )

Net cash provided by investing activities 20,342 51,390

Net cash (used by) provided by investing activities ( 12,316 ) 2,099

Cash flows from financing activities

Proceeds from borrowings 92,000 —

Debt repayments ( 750 ) —

Payments for debt issuance costs ( 278 ) —

Payments for employee taxes related to the net share settlement of equity awards ( 2,959 ) —

Proceeds from exercise of common stock options 131 24,404

1 unchanged sentence

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 15 40

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 50,105 ) 17,900

Net increase in cash, cash equivalents, and restricted cash 50,578 5,939

Cash, cash equivalents, and restricted cash at beginning of period 150,381 103,960

5 unchanged sentences

Accrued capital expenditures $ 2,233 $ —

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

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

APPIAN CORPORATION

1 unchanged sentence

Organization and Description of Business

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) is a unified platform for change.

We accelerate customers’ businesses by discovering, designing, and automating their most important processes.

The Appian Low-Code Platform combines the key capabilities needed to get work done faster, Process Mining + Workflow + Automation, in a unified low-code platform.

Appian is open, enterprise grade, and trusted by industry leaders.

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) is a software company that automates business processes.

The Appian Platform includes everything you need to design, automate, and optimize even the most complex processes from start to finish.

The world's most innovative organizations trust Appian to improve their workflows, unify data, and optimize operations—resulting in better growth and superior customer experiences.

We are headquartered in McLean, Virginia and operate both in the U.S.

7 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2023.

In addition, certain reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation, specifically as it relates to our presentation of certain adjustments to reconcile net loss to net cash used by operating activities in our consolidated statements of cash flows.

Use of Estimates

2 unchanged sentences

Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.

Significant estimates embedded in the condensed consolidated financial statements include, but are not limited to, revenue recognition, income taxes and the related valuation allowance, leases, costs to obtain a contract with a customer, the valuation of financial instruments, and stock-based compensation.

Significant estimates embedded in the condensed consolidated financial statements include, but are not limited to, revenue recognition, income taxes and the related valuation allowance, costs to obtain a contract with a customer, and stock-based compensation.

Principles of Consolidation

14 unchanged sentences

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

however, we believe the financial institutions holding our cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances.

In March 2023, Silicon Valley Bank’s (“SVB”) U.S.

operations were placed into receivership by the Federal Deposit Insurance Corporation (“FDIC”), and its U.K.

operations were placed into a Bank Insolvency Procedure by the Bank of England.

operations were later sold to First Citizens Bank and Trust Company (“First Citizens”), and its U.K.

operations were sold to HSBC UK Bank, Plc (“HSBC”).

We have access to all of our cash, cash equivalents, and investments that were in accounts previously held by SVB, and we do not expect a material impact to our ongoing operations stemming from the SVB matter.

Refer to Note 8 for further discussion regarding the receivership’s impact on our credit facility.

We believe the financial institutions holding our cash deposits are financially sound.

With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss.

Revenue generated from government agencies represented 21.2 % and 19.2 % of our revenue for the three and nine months ended September 30, 2022, respectively, of which the top three U.S.

federal government agencies generated 5.5 % and 4.8 % of our revenue for the three and nine months ended September 30, 2022, respectively.

Additionally, 31.3 % and 33.2 % of our revenue during the three and nine months ended September 30, 2022, respectively, was generated from foreign customers.

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 20.5 % and 18.1 % of our revenue for the three months ended March 31, 2023 and 2022, respectively, of which the top three U.S.

federal government agencies generated 4.2 % and 4.6 % of our revenue for the three months ended March 31, 2023 and 2022, respectively.

Additionally, 33.4 % and 33.5 % of our revenue during the three months ended March 31, 2023 and 2022, respectively, was generated from foreign customers.

Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase, as well as overnight repurchase agreements, to be cash equivalents.

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”).

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.

We paid 25 % of the balance on September 28, 2022, and the remaining 75 % of the balance is due on August 11, 2023.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2022 December 31, 2021 September 30, 2021 December 31, 2020

March 31, 2023 December 31, 2022 March 31, 2022 December 31, 2021

Cash and cash equivalents $ 198,679 $ 148,132 $ 106,795 $ 100,796

2 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 200,959 $ 150,381 $ 109,899 $ 103,960

APPIAN CORPORATION

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.

The allowance for doubtful accounts totaled $ 1.9 million and $ 1.4 million as of September 30, 2022 and December 31, 2021.

The allowance for doubtful accounts totaled $ 2.2 million and $ 2.1 million as of March 31, 2023 and December 31, 2022, respectively.

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

8 unchanged sentences

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

Commission expense was $ 9.5 million and $ 26.5 million for the three and nine months ended September 30, 2022, respectively.

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

Total commission expense was $ 11.0 million and $ 8.2 million for the three months ended March 31, 2023 and 2022, respectively.

Property and Equipment

2 unchanged sentences

Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table outlines the useful lives of our major asset categories:

5 unchanged sentences

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

Investments and Fair Value of Financial Instruments

Refer to Note 15 for a detailed discussion on our policies specific to investments and determining fair value.

Stock-Based Compensation

Refer to Note 11 for a detailed discussion on our policies related to stock-based compensation.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

5 unchanged sentences

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 recorded during the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

The following table summarizes revenue recorded during the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Cloud subscriptions $ 69,692 $ 53,379

6 unchanged sentences

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

Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of transfer to the customer.

Our term license subscriptions are delivered at a point in time while our cloud subscriptions, maintenance and support, and professional services are delivered over time.

5 unchanged sentences

Cloud Subscriptions

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We generate cloud-based subscriptions revenue primarily from the sales of subscriptions to access our cloud offering, together with related support services to our customers.

7 unchanged sentences

Although term license subscriptions are sold with maintenance and support, the software is fully functional at the beginning of the subscription and is considered a distinct performance obligation.

On rare occasions, a cloud-based subscription may include the right for the customer to take possession of the license and as such, the revenue is treated as a term license.

If a cloud-based subscription includes the right for the customer to take possession of the license, the revenue is treated as a term license.

Revenue from term license subscriptions is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the contract term.

11 unchanged sentences

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

For time and materials-based consulting contracts, we have elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of our service to date.

For time and materials-based consulting contracts, we

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

have elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of our service to date.

Training Services

6 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, 2022 and 2021 was insignificant.

Our estimates of variable

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The amount of variable consideration excluded from the transaction price for the three months ended March 31, 2023 and 2022 was insignificant.

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

however, such true-up adjustments are not expected to be material.

5 unchanged sentences

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

We have concluded the residual approach to estimating SSP of our cloud subscriptions is an appropriate allocation of the transaction price.

Term license subscriptions - Given the highly variable selling price of our term license subscriptions, we have established SSP of term license subscriptions using a residual approach after first determining the SSP of maintenance and support.

We have concluded the residual approach to estimating the SSP of our cloud subscriptions is an appropriate allocation of the transaction price.

Term license subscriptions - Given the highly variable selling price of our term license subscriptions, we have established the SSP of term license subscriptions using a residual approach after first determining the SSP of maintenance and support.

Maintenance and support is sold on a standalone basis in conjunction with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee.

Because an economic relationship exists between the license and maintenance and support, we have concluded the residual approach to estimating SSP of term license subscriptions is an appropriate allocation of the transaction price.

Because an economic relationship exists between the license and maintenance and support, we have concluded the residual approach to estimating the SSP of term license subscriptions is an appropriate allocation of the transaction price.

Maintenance and support - We establish the SSP of maintenance and support as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses.

4 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, contract assets of $ 15.3 million and $ 14.0 million, respectively, are included in the Prepaid expenses and other current assets and Other assets line items in our consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, contract assets of $ 14.9 million and $ 14.3 million, respectively, are included in the Prepaid expenses and other current assets and Other assets line items in our consolidated balance sheets.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

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 nine months ended September 30, 2022, we recognized $ 134.4 million of revenue that was included in the deferred revenue balance as of December 31, 2021.

For the three months ended March 31, 2023, we recognized $ 85.4 million of revenue that was included in the deferred revenue balance as of December 31, 2022.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2022, we had an aggregate transaction price of $ 319.9 million allocated to unsatisfied performance obligations.

As of March 31, 2023, we had an aggregate transaction price of $ 366.1 million allocated to unsatisfied performance obligations.

We expect to recognize $ 237.7 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

As of September 30, 2022, our lease portfolio consists entirely of operating leases, most of which are for corporate offices.

As of March 31, 2023, our lease portfolio consists entirely of operating leases, most of which are for corporate offices.

Our operating leases have remaining lease terms with various expiration dates through 2031, and some leases include options to extend the term for up to an additional 10 years.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Expense for operating leases is recognized on a straight-line basis over the lease term as an operating 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.

The following table sets forth the components of lease expense for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges, are not included in right-of-use (“ROU”) assets or lease liabilities but rather are expensed as incurred and recorded as variable lease expense.

The following table sets forth the components of lease expense for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Operating lease cost $ 2,146 $ 1,634

2 unchanged sentences

Total $ 3,537 $ 2,695

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of September 30, 2022 and December 31, 2021 was as follows (in thousands, except for lease term and discount rate):

September 30, 2022 December 31, 2021

Right-of-use assets for operating leases $ 31,841 $ 27,897

Supplemental balance sheet information related to operating leases as of March 31, 2023 and December 31, 2022 is presented in the following table (in thousands, except for lease term and discount rate):

March 31, 2023 December 31, 2022

ROU assets for operating leases $ 35,425 $ 37,248

Operating lease liabilities, current $ 8,980 $ 8,681

3 unchanged sentences

Weighted average discount rate 9.4 % 9.4 %

Supplemental cash flow and expense information related to operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands):

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

2022 2021 2022 2021

Supplemental cash flow and expense information related to operating leases for the three months ended March 31, 2023 and 2022 is shown below (in thousands):

Three Months Ended March 31,

Operating cash outflows for operating leases $ 1,132 $ 2,085

1 unchanged sentence

Interest expense on operating lease liabilities 1,495 1,321

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of our future minimum lease commitments under non-cancellable leases as of September 30, 2022 is as follows (in thousands):

A summary of our future minimum lease commitments under non-cancellable leases as of March 31, 2023 is shown below (in thousands):

Operating Leases

2022 (excluding the nine months ended September 30, 2022)

2023 (excluding the three months ended March 31, 2023)

Thereafter 42,504

2 unchanged sentences

Total $ 65,053

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.

The transaction was financed through available cash on hand.

The allocation of the purchase price was based upon the fair value of the assets acquired and liabilities assumed.

As of the acquisition date, the purchase price was assigned to the acquired assets and assumed liabilities as follows (in thousands):

Cash acquired $ 256

Other current assets 106

Property and equipment 59

Developed technology 5,974

Customer relationships 750

Goodwill 24,521

Other non-current assets 27

Total assets acquired 31,693

Current liabilities 638

Non-current liabilities 38

Total liabilities assumed 676

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.

During the third quarter of 2022, we finalized the fair value of the assets acquired and liabilities assumed in the acquisition, and the amounts presented above are now final.

Measurement period adjustments, recorded during the first quarter of 2022, 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,

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and an immaterial adjustment to working capital.

No additional measurement period adjustments were recognized for the nine months ended September 30, 2022.

Goodwill and Intangible Assets

Goodwill was comprised of the following as of September 30, 2022 and December 31, 2021 (in thousands):

Goodwill was comprised of the following as of March 31, 2023 and December 31, 2022 (in thousands):

Carrying Amount

Balance as of December 31, 2021

Goodwill acquired 24,521

Foreign currency translation adjustments ( 1,446 )

Balance as of December 31, 2022

Goodwill acquired —

Foreign currency translation adjustments 362

Balance as of September 30, 2022

Intangible assets, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Balance as of March 31, 2023

Intangible assets, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

Developed technology $ 6,987 $ 6,893

4 unchanged sentences

Intangible assets, net $ 4,950 $ 5,251

Intangible amortization expense was $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2022, respectively.

Intangible amortization expense was $ 0.3 million and $ 0.5 million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, the weighted average remaining amortization periods for developed technology, non-RPA customer relationships, and RPA customer relationships were approximately 3.7 years , 8.7 years , and 7.3 years , respectively.

The projected annual amortization expense related to amortizable intangible assets as of September 30, 2022 is as follows (in thousands):

Intangible amortization expense was $ 0.4 million for each of the three months ended March 31, 2023 and 2022.

As of March 31, 2023, the weighted average remaining amortization periods for developed technology, non-RPA customer relationships, and RPA customer relationships were approximately 3.2 years, 8.4 years, and 6.8 years, respectively.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of March 31, 2023:

Projected Amortization

2022 (excluding the nine months ended September 30, 2022)

2023 (excluding the three months ended March 31, 2023)

Thereafter 298

Total projected amortization expense $ 4,950

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment, net

Property and equipment, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Property and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

Leasehold improvements $ 50,973 $ 45,959

6 unchanged sentences

Property and equipment, net $ 45,877 $ 41,855

Depreciation expense totaled $ 1.4 million and $ 4.2 million for the three and nine months ended September 30, 2022, respectively.

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

We had no disposals or retirements and recorded no gains or losses on disposal during each of the three and nine months ended September 30, 2022.

We recorded $ 0.1 million in losses on disposal for the three and nine months ended September 30, 2021.

Depreciation expense totaled $ 2.0 million and $ 1.4 million for the three months ended March 31, 2023 and 2022, respectively.

We disposed of or retired $ 1.4 million worth of fully depreciated property and equipment during the three months ended March 31, 2023.

There were no disposals or retirements during the three months ended March 31, 2022.

Accrued Expenses

Accrued expenses consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Accrued expenses consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

Hosting costs $ 3,393 $ 2,802

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Reimbursable employee expenses 854 1,004

Taxes payable 542 550

Audit and tax expenses 1,393 911

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Total $ 15,373 $ 12,227

Line of Credit

We have a $ 20.0 million revolving line of credit with a lender that matures in November 2025.

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.

We were in compliance with all covenants as of September 30, 2022.

As of September 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.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Senior Secured Credit Facilities Credit Agreement

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).

The new Credit Agreement matures on November 3, 2027.

We have a Senior Secured Credit Facilities Credit Agreement (the “Credit Agreement”) which provides for a five-year term loan facility in an aggregate principal amount of $ 120.0 million and, in addition, up to $ 60.0 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).

On February 21, 2023, we executed the second amendment to the credit agreement which increased the aggregate principal amount of the term loan facility by $ 30.0 million and the limit of the revolving credit facility by $ 15.0 million.

The Credit Agreement matures on November 3, 2027.

We will use the proceeds from the $ 150.0 million term loan to fund the continued growth of our business and support our working capital requirements.

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An additional interest rate margin is added to the elected interest rates.

During the first three years of the Credit Agreement, the additional interest rate margin ranges from 1.5 % to 2.5 % in the case of Base Rate advances and from 2.5 % to 3.5 % in the case of Term SOFR advances, depending on our debt to recurring revenue leverage ratio.

During the final two years of the Credit Agreement, the interest rate margin ranges from 0.5 % to 2.5 % in the case of Base Rate advances and from 1.5 % to 3.5 % in the case of Term SOFR advances, depending on our debt to consolidated adjusted EBITDA (as defined in the Credit Agreement) leverage ratio.

Additionally, the Credit Agreement contains customary representations, warranties and covenants, including covenants by us limiting additional indebtedness, guaranties, liens, fundamental changes, mergers and consolidations, dispositions of assets, investments, paying dividends on capital stock or redeeming, repurchasing or retiring capital stock, or prepaying certain junior indebtedness and preferred stock , certain corporate changes, and transactions with affiliates.

The Credit Agreement also provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy, and the occurrence of a material adverse effect on us.

The new Credit Agreement replaces our existing Line of Credit that was in place as of September 30, 2022.

During the first three years of the Credit Agreement, the additional interest rate margin ranges from 1.50 % to 2.50 % in the case of Base Rate advances or from 2.50 % to 3.50 % in the case of Term SOFR advances, depending on our debt to recurring revenue leverage ratio (as defined in the Credit Agreement).

During the final two years of the Credit Agreement, the interest rate margin ranges from 0.5 % to 2.5 % in the case of Base Rate advances and from 1.5 % to 3.5 % in the case of Term SOFR advances, depending on our debt to consolidated adjusted EBITDA leverage ratio (as defined in the Credit Agreement).

In addition, the Credit Agreement contains other customary representations, warranties and covenants, including covenants by us limiting additional indebtedness, guaranties, liens, fundamental changes, mergers and consolidations, dispositions of assets, investments, paying dividends on capital stock or redeeming, repurchasing or retiring capital stock, or prepaying certain junior indebtedness and preferred stock, certain corporate changes, and transactions with affiliates.

The Credit Agreement also provides for customary events of default, including but not limited to, non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy, and the occurrence of a material adverse effect on us.

The following table summarizes outstanding debt balances (in thousands):

March 31, 2023 December 31, 2022

Borrowings under revolving credit facility expiring November 3, 2027

Secured term loan facility 148,625 119,375

Debt issuance costs ( 1,465 ) ( 1,256 )

Total debt, net of debt issuance costs $ 209,160 $ 118,119

Debt, current $ 65,432 $ 2,740

Long-term debt, net of current portion 143,728 115,379

Total debt $ 209,160 $ 118,119

We were in compliance with all covenants contained in the Credit Agreement.

We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.

As of March 31, 2023, we had $ 62.0 million outstanding under our $ 75.0 million revolving credit facility, and we had outstanding letters of credit totaling $ 12.0 million in connection with securing our leased office space.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As discussed in Note 2, in March 2023 SVB, the lead lender of our Credit Agreement, was placed into receivership by the FDIC and subsequently purchased by First Citizens.

Under the purchase and assumption agreement, First Citizens assumed SVB’s obligations under our existing credit facility.

None of the terms of our Credit Agreement were amended or otherwise impacted by First Citizen’s acquisition of SVB.

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.

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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, 2022, the actual effective tax rates were ( 0.6 )% and 0.8 %, respectively.

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

The-year-to date tax benefit for the nine months ended September 30, 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.

As of September 30, 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.

For the three months ended March 31, 2023 and 2022, the actual effective tax rates were ( 3.2 )% and 6.4 %, respectively.

The tax benefit recognized in 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 GmbH as a result of post-acquisition tax planning and the merger of German subsidiaries.

As of March 31, 2023, our net unrecognized tax benefits totaled $ 4.5 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.

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federal jurisdiction and in various state and foreign jurisdictions.

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

Due to our net operating loss carryforwards, the tax years 2016 through 2022 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

Equity Incentive Plans

In May 2017, our Board of Directors adopted, and our stockholders approved, the 2017 Equity Incentive Plan (the “2017 Plan”), which became effective as of the date of the final prospectus for our initial public offering.

The 2017 Plan provides for the grant of incentive stock options to employees and for the grant of nonstatutory stock options, restricted stock awards, RSUs, stock appreciation rights, performance-based stock awards, and other forms of equity compensation to employees, including officers, non-employee directors, and consultants.

We initially reserved 6,421,442 shares of Class A common stock for issuance under the 2017 Plan, which included 421,442 shares that remained available for issuance under our 2007 Stock Option Plan (the “2007 Plan”) at the time the 2017 Plan became effective.

The number of shares reserved under the 2017 Plan increases for any shares subject to outstanding awards originally granted under the 2007 Plan that expire or are forfeited prior to exercise.

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

As of September 30, 2022, there were 7,195,049 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 2,851,988 were available to be issued.

Stock-Based Compensation Expense

We account for stock-based compensation expense related to stock-based awards based on the estimated fair value of the award on the grant date.

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

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 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 derive an estimate, 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.

Expected volatility is based on the historical volatility of our publicly traded stock over the estimated expected term of the stock options.

We assume zero dividend yield because we have historically not paid dividends and do not anticipate paying dividends in the near future.

In June 2022, our Board of Directors granted a stock option to purchase 700,000 shares of our Class A common stock to our Chief Executive Officer (the “2022 CEO Grant”) under the 2017 Plan with an exercise price of $ 50.63 per share.

The 2022 CEO Grant is eligible to vest based on the achievement of various stock price appreciation targets of our Class A common stock.

Specifically, the 2022 CEO Grant vests in four installments of 25 % each if the average closing price per share for a 365 day calendar period equals each of $ 175 , $ 200 , $ 225 , and $ 250 , respectively (the “Vesting Price Threshold”), prior to June 7, 2030.

The option also vests if the Company engages in a Corporate Transaction, as defined in the Plan, in which the Company’s Class A common stock is valued at or above the Vesting Price Threshold.

The fair value of the 2022 CEO Grant was determined using a Monte Carlo simulation.

The fair value of the award at the grant date was $ 18.8 million and is being amortized over derived service periods ranging from 3.4 to 4.1 years.

No stock options were issued during the three months ended September 30, 2022 and 2021.

The only stock option awarded during the nine months ended September 30, 2022 and 2021 was the 2022 CEO Grant.

The following table summarizes the assumptions used to estimate the fair value of the 2022 CEO stock option grant:

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

2022 2021 2022 2021

Risk-free interest rate * * 3.01 % *

Expected term (in years) * * ** *

Expected volatility * * 70 % *

Expected dividend yield * * — % *

* Not applicable because no stock options were granted during the period.

** Each Vesting Price Threshold for the 2022 CEO grant has a unique expected term ranging from 3.4 to 4.1 years.

The following table summarizes stock option activity for the nine months ended September 30, 2022:

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

Outstanding at December 31, 2021

2,953,356 $ 15.16 4.0 $ 147,812

Granted 700,000 50.63

Exercised ( 902,392 ) 27.93 31,790

Expired ( 6,800 ) 3.65

Forfeited ( 10,280 ) 12.28

Outstanding at September 30, 2022

2,733,884 $ 20.07 5.3 $ 63,622

Exercisable at September 30, 2022

2,033,684 $ 9.55 3.8 $ 63,618

The total fair value of stock options that vested during the nine months ended September 30, 2022 and 2021 was $ 0.9 million and $ 10.7 million, respectively.

As of September 30, 2022, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO Grant, was $ 17.2 million and will be recognized over a weighted average period of 3.4 years.

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2022:

Number of Shares Weighted Average Grant Date Fair Value

Non-vested and outstanding at December 31, 2021

1,209,529 $ 70.99

Granted 534,213 52.93

Vested ( 166,836 ) 74.30

Forfeited ( 157,732 ) 73.54

Non-vested and outstanding at September 30, 2022

1,419,174 $ 63.52

As of September 30, 2022, total unrecognized compensation cost related to unvested RSUs was approximately $ 68.2 million, which will be recognized over a weighted average period of 1.7 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, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

RSUs $ 9,845 $ 4,997 $ 25,378 $ 13,405

Stock options 1,272 47 1,517 3,820

Common stock awards to the Board of Directors 219 156 532 467

Total stock-based compensation expense $ 11,336 $ 5,200 $ 27,427 $ 17,692

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 consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

As of March 31, 2023, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO Grant, was $ 14.7 million and will be recognized over a weighted average period of 2.9 years.

Total unrecognized compensation cost related to unvested RSUs was approximately $ 55.2 million, which will be recognized over a weighted average period of 1.5 years.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the components of our stock-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Cost of revenue

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Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period.

Diluted loss per share is computed similar to basic, except the weighted average number of common shares outstanding are increased to include additional outstanding shares from the assumed exercise of stock options and vesting of RSUs, if dilutive.

Diluted loss per share is computed similar to basic, except the weighted average number of common shares outstanding is increased to include additional outstanding shares from the assumed exercise of stock options and vesting of RSUs, if dilutive.

The dilutive effect, if any, of convertible shares is calculated using the treasury stock method.

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

Three and Nine Months Ended September 30,

Three Months Ended March 31,

Stock options 2,678,476 2,128,943

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In July 2021, we executed a non-cancellable cloud hosting arrangement with Amazon Web Services (“AWS”) that contains provisions for minimum purchase commitments.

Specifically, purchase commitments under the agreement total $ 131.0 million over five years, including $ 22.0 million in the first year, $ 25.0 million in the second year, and $ 28.0 million in each of the third, fourth, and fifth years.

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 and nine months ended September 30, 2022 totaled $ 9.0 million and $ 24.8 million , respectively.

Specifically, purchase commitments under the agreement total $ 131.0 million over five years.

The agreement, which is in its second year, contains minimum spending requirements of $ 25.0 million in the second year and $ 28.0 million in each of the third, fourth, and fifth years.

Spending under this agreement for the three months ended March 31, 2023 and 2022 totaled $ 9.4 million and $ 7.8 million, respectively.

The timing of payments under the agreement may vary.

However, we expect to meet our minimum purchase commitments for the remainder of the contract term.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pegasystems Litigation

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Defendant Youyong Zou has satisfied the judgment of $ 5,000 (plus interest) against him in lieu of appealing that judgment.

On September 15, 2022, Pegasystems filed a notice of appeal.

On September 15, 2022, Pegasystems filed a notice of appeal, and on February 6, 2023, Pegasystems filed its opening brief with the Court of Appeals of Virginia.

On March 29, 2023, we filed our response brief.

Pegasystems filed a reply brief on May 3, 2023.

The timeline of the case is solely within the control of the Court of Appeals until it rules.

Pegasystems is not required to pay us the judgment, attorney’s fees, or post-judgment interest until all appeals are exhausted.

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Consistent with other judgments, there is no guarantee we will be able to collect all or any portion of the judgment.

Consequently, we will not record the award in our condensed consolidated financial statements until all contingencies are resolved and we collect on the judgment.

Consequently, we will not record the award in our consolidated financial statements until all contingencies are resolved and we collect on the judgment.

Other Legal Matters

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Our reportable segment determination is based on our management and internal reporting structure, the nature of the subscriptions and services we offer, and the financial information that is evaluated regularly by our chief operation decision maker.

The following table summarizes revenue by geography for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

The following table summarizes revenue by geography for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Domestic $ 90,005 $ 76,039

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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, 2022 or 2021.

Substantially all of our long-lived assets were held in the United States as of September 30, 2022 and December 31, 2021.

There were no individual foreign countries from which more than 10% of our total revenue was attributable for the three months ended March 31, 2023 or 2022.

Substantially all of our long-lived assets were held in the United States as of March 31, 2023 and December 31, 2022.

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Investments and Fair Value Measurements

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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, 2022 and December 31, 2021.

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of March 31, 2023 and December 31, 2022.

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

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• 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, 2022 and December 31, 2021 because of the relatively short duration of these instruments.

The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of March 31, 2023 and December 31, 2022 because of the relatively short duration of these instruments.

Additionally, the carrying value of our debt associated with the term loan facility approximates fair value because the interest rates are variable and reset on relatively short durations to the then market rates.

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, 2022 are as follows (in thousands):

As of September 30, 2022

The components of our investments as of March 31, 2023 are as follows (in thousands):

APPIAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2023

Fair Value Measurement Balance Sheet Classification

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Money market fund Level 1 $ 94,081 $ — $ 94,081 $ 94,081 $ —

Treasuries Level 1 17,985 ( 70 ) 17,915 — 17,915

Treasury bonds Level 1 12,149 25 12,174 — 12,174

Commercial paper Level 2 38,708 — 38,708 — 38,708

Corporate bonds Level 2 2,490 ( 1 ) 2,489 — 2,489

Agency bonds Level 2 2,432 — 2,432 — 2,432

Total investments $ 149,860 $ 24 $ 149,884 $ 94,081 $ 55,803

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Fair Value Measurement Balance Sheet Classification

Fair Value Level Cost Basis Unrealized Gains (Losses) Market Value Cash and Cash Equivalents Short-term Investments and Marketable Securities Long-term Investments

Fair Value Level Cost Basis Unrealized Gains (Losses) Market Value Cash and Cash Equivalents Short-term Investments and Marketable Securities

Money market fund Level 1 $ 39,469 $ — $ 39,469 $ 39,469 $ —

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Corporate bonds Level 2 9,353 ( 12 ) 9,341 — 9,341

Asset-backed securities Level 2 15,655 ( 8 ) 15,647 — 15,647 —

Agency bonds Level 2 2,432 3 2,435 — 2,435

Total investments $ 87,354 $ ( 22 ) $ 87,332 $ 39,469 $ 47,863

There were no Level 3 assets held at any point during the three and nine months ended September 30, 2022 and 2021.

Additionally, there were no transfers between Levels 1 and 2 during the three and nine months ended September 30, 2022 and 2021.

The amortized cost basis and fair value of debt securities as of September 30, 2022, by contractual maturity, are as follows (in thousands):

As of September 30, 2022

There were no Level 3 assets held at any point during the three months ended March 31, 2023 and 2022.

Additionally, there were no transfers between Levels 1 and 2 during the three months ended March 31, 2023 and 2022.

I nterest income on our investments totaled $ 2.1 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

The amortized cost basis and fair value of debt securities as of March 31, 2023, by contractual maturity, are as follows (in thousands):

As of March 31, 2023

Cost Basis Fair Value

Due in one year or less $ 149,860 $ 149,884

Due after one year through five years — —

Total investments $ 149,860 $ 149,884

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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