What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 167 added, 118 removed, 482 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except par value and share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets

33 unchanged sentences

Class A common stock—par value $ 0.0001 ;

500,000,000 shares authorized as of March 31, 2024 and December 31, 2023 and 42,359,967 and 42,169,970 shares issued as of March 31, 2024 and December 31, 2023, respectively

500,000,000 shares authorized as of June 30, 2024 and December 31, 2023 and 42,359,967 and 42,169,970 shares issued as of June 30, 2024 and December 31, 2023, respectively

Class B common stock—par value $ 0.0001 ;

100,000,000 shares authorized as of March 31, 2024 and December 31, 2023 and 31,196,796 and 31,196,796 shares issued as of March 31, 2024 and December 31, 2023, respectively

100,000,000 shares authorized as of June 30, 2024 and December 31, 2023 and 31,196,796 and 31,196,796 shares issued as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 608,528 595,781

1 unchanged sentence

Accumulated deficit ( 596,407 ) ( 519,892 )

Treasury stock at cost, 1,320,531 shares as of March 31, 2024

Treasury stock at cost, 1,213,686 shares as of June 30, 2024

Total stockholders’ (deficit) equity ( 45,658 ) 52,341

4 unchanged sentences

(unaudited, in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Subscriptions $ 112,974 $ 93,794 $ 230,668 $ 192,751

13 unchanged sentences

Other non-operating expense

Other expense (income), net 8,207 ( 2,690 )

Other (income) expense, net ( 1,545 ) ( 3,886 ) 6,662 ( 6,576 )

Interest expense 6,107 4,755 11,753 7,873

11 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net loss $ ( 43,592 ) $ ( 42,355 ) $ ( 76,515 ) $ ( 79,184 )

1 unchanged sentence

Foreign currency translation adjustments ( 1,097 ) ( 3,127 ) 11,746 ( 3,873 )

Unrealized gains on available-for-sale securities

Total other comprehensive loss, net of income taxes $ ( 20,076 ) $ ( 37,529 )

Unrealized (losses) gains on available-for-sale securities ( 7 ) ( 45 ) ( 3 ) 1

Other comprehensive loss, net of income taxes $ ( 44,696 ) $ ( 45,527 ) $ ( 64,772 ) $ ( 83,056 )

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

12 unchanged sentences

Repurchase of common stock ( 1,320,531 ) — — — — ( 50,019 ) ( 50,019 )

( 1,320,531 ) — — — — ( 50,019 ) ( 50,019 )

Stock-based compensation expense — — 10,606 — — — 10,606

1 unchanged sentence

Balance, March 31, 2024 72,236,232 $ 7 $ 603,870 $ ( 10,708 ) $ ( 552,815 ) $ ( 50,019 ) $ ( 9,665 )

Net loss — — — — ( 43,592 ) — ( 43,592 )

Issuance of common stock to directors 4,692 — ( 178 ) — — 178 —

Vesting of restricted stock units 77,116 — ( 4,279 ) — — 2,919 ( 1,360 )

Exercise of stock options 25,037 — ( 785 ) — — 948 163

Stock-based compensation expense — — 9,900 — — — 9,900

Other comprehensive loss — — — ( 1,104 ) — — ( 1,104 )

Balance, June 30, 2024

72,343,077 $ 7 $ 608,528 $ ( 11,812 ) $ ( 596,407 ) $ ( 45,974 ) $ ( 45,658 )

8 unchanged sentences

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

Other comprehensive income — — — ( 700 ) — ( 700 )

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

Balance, March 31, 2023

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

Net loss — — — — ( 42,355 ) ( 42,355 )

Issuance of common stock to directors 4,928 — — — — —

Vesting of restricted stock units 99,836 — ( 1,816 ) — — ( 1,816 )

Exercise of stock options 53,190 — 428 — — 428

Stock-based compensation expense — — 11,148 — — 11,148

Other comprehensive loss — — — ( 3,172 ) — ( 3,172 )

Balance, June 30, 2023

73,113,333 7 $ 579,378 $ ( 11,118 ) $ ( 487,635 ) $ 80,632

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

2 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

3 unchanged sentences

Depreciation expense and amortization of intangible assets 4,941 4,705

Lease impairment charges 5,462 —

Bad debt expense 253 419

Amortization of debt issuance costs 290 223

(Benefit) provision for deferred income taxes ( 450 ) 357

Benefit for deferred income taxes ( 982 ) ( 518 )

Foreign currency transaction losses, net 12,787 —

14 unchanged sentences

Purchases of property and equipment ( 2,932 ) ( 7,805 )

Net cash provided by (used by) investing activities

Net cash used by investing activities

( 21,629 ) ( 25,372 )

9 unchanged sentences

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash ( 1,491 ) 309

Net increase in cash, cash equivalents, and restricted cash 20,757 50,578

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 28,564 ) 23,421

Cash, cash equivalents, and restricted cash at beginning of period 149,351 150,381

5 unchanged sentences

Accrued capital expenditures $ 182 $ 392

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

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

APPIAN CORPORATION

4 unchanged sentences

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.

and internationally, including Australia, Canada, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

We are headquartered in McLean, Virginia and operate both in the United States and internationally, including Australia, Canada, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and footnotes include the accounts of Appian and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

The accompanying unaudited consolidated financial statements and footnotes include the accounts of Appian and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial reporting.

In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity, and cash flows.

All intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods.

These unaudited 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, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024.

These unaudited 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, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S.

GAAP requires us to make estimates and judgments that affect the amounts reported in these condensed consolidated financial statements and accompanying notes.

The preparation of our consolidated financial statements in conformity with U.S.

GAAP requires us to make estimates and judgments that affect the amounts reported in these consolidated financial statements and accompanying notes.

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 established against deferred tax assets, the amortization period of deferred commissions, the amortization period of the cost to obtain the judgment preservation insurance (as discussed in Note 12), and stock-based compensation.

Significant estimates embedded in the consolidated financial statements include, but are not limited to, revenue recognition, income taxes and the related valuation allowance established against deferred tax assets, the amortization period of deferred commissions, the amortization period of the cost to obtain the judgment preservation insurance policy (as discussed in Note 12), lease impairments, and stock-based compensation.

Revenue Recognition

1 unchanged sentence

Concentration of Credit and Customer Risk

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

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

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

1 unchanged sentence

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 21.7 % and 20.5 % of our revenue for the three months ended March 31, 2024 and 2023, respectively, of which the top three U.S.

federal government agencies generated 4.5 % and 4.2 % of our revenue for the three months ended March 31, 2024 and 2023, respectively.

Additionally, 37.2 % and 33.4 % of our revenue during the three months ended March 31, 2024 and 2023, respectively, was generated from international customers.

No single end-customer accounted for more than 10% of our total revenue in the three months ended March 31, 2024 or 2023.

As of March 31, 2024, we had one customer whose balance comprised 12 % of total accounts receivable.

Revenue generated from government agencies represented 22.6 % and 22.1 % of our revenue for the three and six months ended June 30, 2024, respectively.

Additionally, 38.2 % and 37.7 % of our revenue during the three and six months ended June 30, 2024, respectively, was generated from international customers.

Revenue generated from government agencies represented 20.1 % and 20.3 % of our revenue for the three and six months ended June 30, 2023, respectively.

Additionally, 38.4 % and 35.8 % of our revenue during the three and six months ended June 30, 2023, respectively, was generated from international customers.

No single end-customer accounted for more than 10% of our total revenue in the three and six months ended June 30, 2024, or 2023.

As of June 30, 2024, we had one customer whose balance comprised 15 % of total accounts receivable.

Cash, Cash Equivalents, and Restricted Cash

3 unchanged sentences

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

March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022

June 30, 2024 December 31, 2023 June 30, 2023 December 31, 2022

Cash and cash equivalents $ 120,787 $ 149,351 $ 171,530 $ 148,132

1 unchanged sentence

Total cash, cash equivalents, and restricted cash $ 120,787 $ 149,351 $ 173,802 $ 150,381

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts.

Allowance for Doubtful Accounts

Accounts receivable and unbilled revenue are stated at realizable value, net of an allowance for doubtful accounts.

The allowance for doubtful accounts is based on our assessment of the collectability of accounts and incorporates an estimation of expected lifetime credit losses on our receivables.

1 unchanged sentence

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 $ 2.3 million and $ 2.6 million as of March 31, 2024 and December 31, 2023, respectively.

The allowance for doubtful accounts totaled $ 2.7 million and $ 2.6 million as of June 30, 2024 and December 31, 2023, respectively.

Deferred Commissions

7 unchanged sentences

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

Total commission expense was $ 11.4 million and $ 11.0 million for the three months ended March 31, 2024 and 2023, respectively.

Total commission expense was $ 11.5 million and $ 22.9 million for the three and six months ended June 30, 2024, respectively.

Total commission expense was $ 11.3 million and $ 22.3 million for the three and six months ended June 30, 2023, 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.

The estimated useful lives of our property and equipment are generally 3 years for computer software, computer hardware, and internally developed software, 5 years for equipment, and 10 years years for office furniture and fixtures.

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

Severance Costs

In the past, we have incurred severance costs related to involuntary reductions in our workforce designed to right-size our employee base and improve operations.

For involuntary termination benefits not provided under the terms of ongoing arrangements, we record severance costs once the terms of the arrangement have been established and communicated to employees.

In June 2024, we approved a reduction of the Company’s workforce by approximately 150 full-time employees, intended to align sales and marketing teams with our go-to-market strategy and improve profitability.

We incurred severance costs related to the involuntary reductions in our workforce.

Costs related to benefits provided in accordance with mutually understood and ongoing agreements are recognized when an obligation has been incurred, it is probable the benefits will be paid, and the amount to be paid can be reasonably estimated.

We did not incur any such severance costs during the three months ended March 31, 2024, while severance costs related to actions totaled $ 4.2 million for the three months ended March 31, 2023.

We incurred severance costs of $ 5.5 million during the three and six months ended June 30, 2024.

The majority of the costs incurred are expected to be paid to the impacted employees by December 31, 2024.

In 2023, severance costs related to prior actions totaled $ 2.1 million and $ 6.3 million for the three and six months ended June 30, 2023, respectively.

Treasury Stock

We account for treasury stock under the cost method.

When treasury stock is reissued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital (“APIC”) in our consolidated balance sheets.

When treasury stock is reissued at a price lower than its cost, the difference is recorded as a component of APIC to the extent there are previously recorded gains to offset the losses.

If there are no treasury stock gains in APIC, the losses upon reissuance of treasury stock are recorded as an increase to accumulated deficit.

During the three and six months ended June 30, 2024, we have reissued treasury stock to satisfy employee stock option exercises and vesting of restricted stock units.

Because we are in an accumulated deficit position, all reissuances of treasury stock have been recorded as a decrease to additional-paid-in-capital in our consolidated balance sheets.

Recent Accounting Pronouncements

We have not adopted any new accounting guidance in 2024 that has had a material impact on our condensed consolidated financial statements or disclosures.

We have not adopted any new accounting guidance in 2024 that has had a material impact on our consolidated financial statements or disclosures.

Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvement to Reportable Segment Disclosures (ASU 2023-07), which enhances the disclosure requirements for operating segments in our annual and interim consolidated financial statements.

Improvement to Reportable Segment Disclosures, which enhances the disclosure requirements for operating segments in our annual and interim consolidated financial statements.

The new guidance is effective for us beginning with our annual reporting for fiscal year 2024 and for interim period reporting beginning in fiscal year 2025 and will be applied on a retrospective basis.

1 unchanged sentence

The new ASU requires public companies to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Additionally, it requires public companies to disclose the title and position of the Chief Operating Decision Maker (“CODM”).

Additionally, it requires public companies to disclose the title and position of the Chief Operating Decision Maker.

The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

2 unchanged sentences

In December 2023, the FASB issued ASU 2023-09, Income Tax (Topic 740):

Improvement to Income Tax Disclosures (ASU 2023-09), which requires public companies to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

Improvement to Income Tax Disclosures, which requires public companies to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

9 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 months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following table summarizes revenue recorded during the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Cloud subscriptions $ 88,428 $ 74,442 $ 175,031 $ 144,134

21 unchanged sentences

Our term license subscriptions revenue is derived from customers with on-premises installations of our platform.

The majority of our contracts are one year in length.

The majority of our term license contracts are one year in length.

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.

12 unchanged sentences

We also sell advisory services on a subscription basis to support customers or partners with their development and deployment.

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

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

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

9 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 months ended March 31, 2024 and 2023 was immaterial.

The amount of variable consideration excluded from the transaction price for the three and six months ended June 30, 2024 and 2023 was immaterial.

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

20 unchanged sentences

The following table sets forth our contract asset and contract liability balances (in thousands):

March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022

June 30, 2024 December 31, 2023 June 30, 2023 December 31, 2022

Contract assets, current *

7 unchanged sentences

* Current and non-current contract assets are reported as components of the ‘Prepaid expenses and other current assets’ and ‘Other assets’ line items, respectively, in our consolidated balance sheets.

Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $ 94.2 million and $ 85.4 million for the three months ended March 31, 2024 and 2023, respectively.

Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $ 166.6 million and $ 141.3 million for the six months ended June 30, 2024 and 2023, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2024, we had an aggregate transaction price of $ 468.3 million allocated to unsatisfied performance obligations.

As of June 30, 2024, we had an aggregate transaction price of $ 469.4 million allocated to unsatisfied performance obligations.

We expect to recognize $ 300.3 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

As of March 31, 2024, our lease portfolio consists entirely of operating leases for corporate offices.

As of June 30, 2024, our lease portfolio consists entirely of operating leases 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.

3 unchanged sentences

We often receive customary incentives from our landlords such as tenant improvement allowances (“TIAs”) and rent abatement periods, which effectively reduce total lease payments owed for the leases.

The following table sets forth the components of lease expense for the three months ended March 31, 2024 and 2023 (in thousands, exclusive of sublease income):

Three Months Ended March 31,

The following table sets forth the components of lease expense for the three and six months ended June 30, 2024 and 2023 (in thousands, exclusive of sublease income):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating lease cost $ 2,410 $ 2,145 $ 4,821 $ 4,291

2 unchanged sentences

Total $ 4,178 $ 3,527 $ 8,234 $ 7,064

Sublease income totaled $ 0.3 million for each of the three months ended March 31, 2024 and 2023.

Sublease income totaled $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2024, respectively.

Sublease income totaled $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2023, respectively.

Lease Impairment Charges

In connection with the headcount reductions approved in June 2024, and our continued efforts to streamline operations and maximize efficiencies, we have initiated supplemental actions to reduce the footprint of our leased office spaces.

Pursuant to these initiatives, we have amended and extended the terms of our existing sublease agreement and are seeking a sublease for an additional floor within our corporate headquarters facility.

During the three months ended June 30, 2024, we recorded non-cash lease impairment charges of $ 5.5 million within general and administrative expenses in our consolidated statements of operations related to the two ROU assets.

The non-cash lease impairment charges represent the amount that the carrying value of the two asset groups exceeded their estimated fair values.

The asset groups represented two separate floors within our corporate headquarters facility.

The fair values of the two asset groups were measured using discounted cash flow models based on market rents and sublease incomes projected over the remaining lease terms.

Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of March 31, 2024 and December 31, 2023 is presented in the following table (in thousands, except for lease term and discount rate):

March 31, 2024 December 31, 2023

Supplemental balance sheet information related to operating leases as of June 30, 2024 and December 31, 2023 is presented in the following table (in thousands, except for lease term and discount rate):

June 30, 2024 December 31, 2023

Right-of-use assets for operating leases $ 32,848 $ 39,975

4 unchanged sentences

Weighted average discount rate 9.4 % 9.4 %

Supplemental cash flow and expense information related to operating leases for the three months ended March 31, 2024 and 2023 is shown below (in thousands):

Three Months Ended March 31,

Supplemental cash flow and expense information related to operating leases for the three and six months ended June 30, 2024 and 2023 is shown below (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating cash outflows for operating leases $ 3,130 $ 988 $ 5,773 $ 2,120

1 unchanged sentence

Interest expense on operating lease liabilities 1,595 1,552 3,224 3,047

There were no TIA reimbursements for the three months ended March 31, 2024, while TIA reimbursements totaled $ 0.6 million for the three months ended March 31, 2023.

A summary of our future minimum lease commitments under non-cancellable leases as of March 31, 2024 is shown below (in thousands):

There were no TIA reimbursements for the three and six months ended June 30, 2024, while TIA reimbursements totaled $ 0.9 million and $ 1.5 million for the three and six months ended June 30, 2023, respectively.

A summary of our future minimum lease commitments under non-cancellable leases as of June 30, 2024 is shown below (in thousands):

Operating Leases

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

Thereafter 34,840

3 unchanged sentences

Goodwill and Intangible Assets

The following table details the changes in goodwill during the three months ended March 31, 2024 and fiscal year ended December 31, 2023 (in thousands):

The following table details the changes in goodwill during the six months ended June 30, 2024 and fiscal year ended December 31, 2023 (in thousands):

Carrying Amount

3 unchanged sentences

Foreign currency translation adjustments ( 801 )

Balance as of March 31, 2024

Intangible assets, net consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Balance as of June 30, 2024

Intangible assets, net consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Developed technology $ 6,881 $ 7,091

3 unchanged sentences

Intangible assets, net $ 3,040 $ 3,889

Intangible amortization expense was $ 0.4 million for each of the three months ended March 31, 2024 and 2023.

As of March 31, 2024, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 2.3 years and 7.0 years, respectively.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of March 31, 2024 (in thousands):

Intangible amortization expense was $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 2.0 years and 6.8 years, respectively.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of June 30, 2024 (in thousands):

Projected Amortization

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

Thereafter 202

1 unchanged sentence

Property and Equipment, net

Property and equipment, net consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Property and equipment, net consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Leasehold improvements $ 54,298 $ 53,313

7 unchanged sentences

Property and equipment, net $ 40,841 $ 42,682

Depreciation expense totaled $ 2.0 million for each of the three months ended March 31, 2024 and 2023.

We had no disposals or retirements during the three months ended March 31, 2024 and disposed of $ 1.4 million worth of fully depreciated property and equipment during the three months ended March 31, 2023.

Depreciation expense totaled $ 2.2 million and $ 4.2 million for the three and six months ended June 30, 2024, respectively.

Depreciation expense totaled $ 2.0 million and $ 4.0 million for the three and six months ended June 30, 2023, respectively.

We disposed of $ 0.3 million worth of fully depreciated equipment during the three and six months ended June 30, 2024, respectively.

We had no disposals or retirements during the three months ended June 30, 2023 and disposed of $ 1.4 million worth of fully depreciated property and equipment during the six months ended June 30, 2023.

Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Accrued expenses consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Hosting costs $ 3,585 $ 2,973

12 unchanged sentences

The Credit Agreement matures on November 3, 2027.

We will use the proceeds to continue funding the growth of our business and support our working capital requirements.

We have been using the proceeds to fund the growth of our business and support our working capital requirements.

Under the agreement, we may elect whether amounts drawn bear interest on the outstanding principal amount at a rate per annum equal to either (a) the higher of the Prime rate or the Federal Funds Effective rate (“Base Rate”) plus 0.5 % or (b) the forward-looking term rate based on the secured overnight financing rate (“Term SOFR”).

5 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Borrowings under revolving credit facility

9 unchanged sentences

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

As of March 31, 2024, we had $ 62.0 million outstanding under our $ 100.0 million revolving credit facility, and we had outstanding letters of credit totaling $ 11.8 million in connection with securing our leased office space.

As of June 30, 2024, we had $ 62.0 million outstanding under our $ 100.0 million revolving credit facility, and we had outstanding letters of credit totaling $ 14.5 million in connection with securing our leased office space.

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

Our operating subsidiaries are exposed to statutory effective tax rates ranging from zero to approximately 35 %.

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 months ended March 31, 2024 and 2023, the actual effective tax rates were 1.4 % and ( 3.2 )%, respectively.

As of March 31, 2024, our net unrecognized tax benefits totaled $ 6.5 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.

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

For the three and six months ended June 30, 2024, the actual effective tax rates were 0.4 % and 0.8 %, respectively.

For the three and six months ended June 30, 2023, the actual effective tax rates were ( 2.0 )% and ( 2.5 )%, respectively.

As of June 30, 2024, our net unrecognized tax benefits totaled $ 6.5 million, which if recognized would result in no net effect on the effective tax rate due to a valuation allowance.

We file income tax returns in the U.S.

1 unchanged sentence

Due to our net operating loss carryforwards, the tax years 2016 through 2023 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 on our condensed consolidated financial statements.

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

Stock-Based Compensation

7 unchanged sentences

We account for forfeitures of our stock-based awards as they occur rather than estimating expected forfeitures.

As of March 31, 2024, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $ 9.7 million and will be recognized over a weighted average period of 2.0 years.

As of June 30, 2024, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $ 8.4 million and will be recognized over a weighted average period of 1.7 years.

Total unrecognized compensation cost related to unvested RSUs was approximately $ 38.0 million, which will be recognized over a weighted average period of 1.4 years.

The following table summarizes the components of our stock-based compensation expense for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following table summarizes the components of our stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Cost of revenue

12 unchanged sentences

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 Months Ended March 31,

Three and Six Months Ended June 30,

Stock options 2,530,468 2,625,286

4 unchanged sentences

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

The agreement, which started July 2021 and is now in its third year as of March 31, 2024, contains minimum spending requirements of $ 28.0 million in each of the third, fourth, and fifth years.

Spending under this agreement for the three months ended March 31, 2024 and 2023 totaled $ 10.3 million and $ 9.4 million, respectively.

The agreement, which started July 2021 and is now in its third year as of June 30, 2024, contains minimum spending requirements of $ 28.0 million in each of the third, fourth, and fifth years.

Spending under this agreement for the three and six months ended June 30, 2024 totaled $ 10.7 million and $ 21.0 million, respectively.

Spending under this agreement for the three and six months ended June 30, 2023 totaled $ 9.1 million and $ 18.5 million, respectively.

The timing of payments under the agreement may vary.

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.

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

Pegasystems Litigation

11 unchanged sentences

On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia.

Both sides have submitted their respective appeal briefs to the Court of Appeals, and the Court held a hearing on the appeal on November 15, 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.

On July 30, 2024, the Court of Appeals of Virginia issued a decision reversing the judgment against Pegasystems and remanding for a new trial.

The decision rejected Pegasystems’ argument that Appian had not presented evidence that trade secrets were misappropriated, but reversed the judgment on the basis of evidentiary and damages rulings made by the trial court.

On the same day, Appian announced its intention to appeal that decision to the Supreme Court of Virginia and seek to reinstate the full judgment against Pegasystems.

A petition to the Supreme Court is expected to be filed by August 29, 2024.

After that, the timeline to hear the petition will be in the control of the Supreme Court.

We cannot predict the outcome of any appeals or the exact time it will take to resolve them.

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.

Judgment Preservation Insurance

2 unchanged sentences

The policy provides up to $ 500.0 million of coverage.

The total cost of the policy was capitalized and will be amortized on a straight-line basis over the estimated length of the appeals process.

As of March 31, 2024, we estimated the length of the appeals process (solely for amortization purposes) to be approximately three years .

The total cost of the policy was capitalized and is being amortized on a straight-line basis over the estimated length of the appeals process.

As of June 30, 2024, we estimated the length of the appeals process (solely for amortization purposes) to be approximately three years .

This estimate is updated each reporting period.

Amortization expense associated with the JPI premium is recorded to general and administrative expenses in our consolidated statements of operations.

JPI amortization expense was $ 4.5 million for the three months ended March 31, 2024.

As of March 31, 2024, $ 18.1 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 28.7 million is classified as 'Other assets’ on our consolidated balance sheets.

JPI amortization expense was $ 4.5 million and $ 9.0 million for the three and six months ended June 30, 2024.

As of June 30, 2024, $ 18.1 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 24.2 million is classified as 'Other assets’ on our consolidated balance sheets.

We are currently evaluating the impact, if any, that the decision from the Court of Appeals of Virginia will have on our estimated length of the appeals process.

Other Legal Matters

5 unchanged sentences

In March 2024, we repurchased 1.3 million shares under this program at an average share price of $ 37.86 , totaling an aggregate cost of $ 50.0 million.

As of March 31, 2024, shareholders’ equity included 72.2 million shares outstanding, net of 1.3 million shares of common stock held in treasury.

As of June 30, 2024, shareholders’ equity included 72.3 million shares outstanding, net of 1.2 million shares of common stock held in treasury.

Segment and Geographic Information

The following table summarizes revenue by geography for the three months ended March 31, 2024, and 2023 (in thousands):

Three Months Ended March 31,

The following table summarizes revenue by geography for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Domestic $ 90,534 $ 78,694 $ 184,647 $ 168,699

2 unchanged sentences

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

The value of our long-lived assets, which are comprised of property and equipment and intangible assets, held in the United States and internationally as of March 31, 2024 were $ 33.0 million and $ 13.0 million, respectively.

The value of our long-lived assets, which are comprised of property and equipment and intangible assets, held in the United States and internationally as of June 30, 2024 were $ 31.8 million and $ 12.1 million, respectively.

As of December 31, 2023, our long-lived assets held in the United States and internationally were $ 34.0 million and $ 12.6 million, respectively.

9 unchanged sentences

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 March 31, 2024 and December 31, 2023.

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of June 30, 2024 and December 31, 2023.

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

2 unchanged sentences

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

The carrying amounts of our restricted cash, accounts receivable, accounts payable, and accrued expenses approximate fair value as of March 31, 2024 and December 31, 2023 because of the relatively short duration of these instruments.

The carrying amounts of our accounts receivable, accounts payable, and accrued expenses approximate fair value as of June 30, 2024 and December 31, 2023 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 has historically consisted largely of debt investments classified as available-for-sale.

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, have been recorded in ‘Accumulated other comprehensive income (loss)’ in our consolidated balance sheets.

As of March 31, 2024, our cash and cash equivalents totaled $ 170.1 million, of which $ 86.0 million was held in readily available checking accounts or overnight repurchase investment accounts, and $ 84.1 million was held in money market funds with less than 90 days of maturity.

Our cash and cash equivalents are classified as Level 1 assets.

We did not hold any short- or long-term investments as of March 31, 2024.

The components of our investments as of June 30, 2024 are as follows (in thousands):

As of June 30, 2024

Fair Value Measurement Balance Sheet Classification

Fair Value Level Cost Basis Unrealized Gains (Losses) Fair Value

Cash and Cash Equivalents Short-term Investments and Marketable Securities

Level 1 $ 66,506 $ — $ 66,506 $ 66,506 $ —

Money market fund Level 1 54,281 — 54,281 54,281 —

Treasury bonds Level 1 14,660 ( 3 ) 14,657 — 14,657

Commercial paper

Level 2 2,893 ( 3 ) 2,890 — 2,890

Corporate bonds

Level 2 10,800 ( 2 ) 10,798 — 10,798

Total investments $ 149,140 $ ( 8 ) $ 149,132 $ 120,787 $ 28,345

At December 31, 2023, our investments consisted of the following (in thousands):

8 unchanged sentences

Total investments $ 159,009 $ ( 5 ) $ 159,004 $ 149,351 $ 9,653

We did not hold any Level 3 assets at any point during the three months ended March 31, 2024 and 2023.

Additionally, there were no transfers between Levels 1 and 2 during the three months ended March 31, 2024 and 2023.

Interest income on our investments totaled $ 1.9 million and $ 2.1 million for the three months ended March 31, 2024 and 2023, respectively.

The contractual maturities of our debt securities as of December 31, 2023 were all one year or less.

We did not hold any Level 3 assets at any point during the three and six months ended June 30, 2024.

Additionally, there were no transfers between Levels 1 and 2 during the six months ended June 30, 2024.

Interest income on our investments totaled $ 1.7 million and $ 3.6 million for the three and six months ended June 30, 2024, respectively.

Interest income on our investments totaled $ 2.7 million and $ 4.7 million for the three and six months

ended June 30, 2023, respectively.

Interest income is recorded within other operating (income) expense on our consolidated statements of operations.

The contractual maturities of our debt securities as of June 30, 2024 and December 31, 2023 were all one year or less.

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

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

What changed 10-Q

Item 1. Financial Statements