What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-01 · 128 added, 104 removed, 545 unchanged (30% of the section changed)

3 unchanged sentences

(in thousands, except par value and share data)

June 30, 2024 December 31, 2023

September 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 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

500,000,000 shares authorized as of September 30, 2024 and December 31, 2023 and 42,361,024 and 42,169,970 shares issued as of September 30, 2024 and December 31, 2023, respectively

Class B common stock—par value $ 0.0001 ;

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

100,000,000 shares authorized as of September 30, 2024 and December 31, 2023 and 31,195,739 and 31,196,796 shares issued as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 614,204 595,781

1 unchanged sentence

Accumulated deficit ( 598,507 ) ( 519,892 )

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

Treasury stock at cost, 1,127,138 shares as of September 30, 2024

Total stockholders’ (deficit) equity ( 49,801 ) 52,341

4 unchanged sentences

(unaudited, in thousands, except per share data)

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

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

2024 2023 2024 2023

13 unchanged sentences

Operating loss ( 7,157 ) ( 15,217 ) ( 65,886 ) ( 91,145 )

Other non-operating expense

Other non-operating (income) expense

Other (income) expense, net ( 12,544 ) 1,939 ( 5,882 ) ( 4,637 )

Interest expense 6,168 4,917 17,921 12,790

Total other non-operating expense 4,562 869 18,415 1,297

Total other non-operating (income) expense ( 6,376 ) 6,856 12,039 8,153

Loss before income taxes ( 781 ) ( 22,073 ) ( 77,925 ) ( 99,298 )

Income tax (benefit) expense ( 164 ) 824 ( 629 ) 1,959

Income tax expense 1,319 178 690 2,137

Net loss $ ( 2,100 ) $ ( 22,251 ) $ ( 78,615 ) $ ( 101,435 )

7 unchanged sentences

(unaudited, in thousands)

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

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

2024 2023 2024 2023

2 unchanged sentences

Foreign currency translation adjustments ( 11,139 ) 1,060 607 ( 2,813 )

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

Unrealized gains on available-for-sale securities 142 9 139 10

Other comprehensive loss, net of income taxes $ ( 13,097 ) $ ( 21,182 ) $ ( 77,869 ) $ ( 104,238 )

23 unchanged sentences

Balance, June 30, 2024 72,343,077 $ 7 $ 608,528 $ ( 11,812 ) $ ( 596,407 ) $ ( 45,974 ) $ ( 45,658 )

Net loss — — — — ( 2,100 ) — ( 2,100 )

Issuance of common stock to directors 5,060 — ( 192 ) — — 192 —

Vesting of restricted stock units 69,362 — ( 3,289 ) — — 2,627 ( 662 )

Exercise of stock options 12,126 — ( 348 ) — — 459 111

Stock-based compensation expense — — 9,505 — — — 9,505

Other comprehensive loss — — — ( 10,997 ) — — ( 10,997 )

Balance, September 30, 2024

72,429,625 $ 7 $ 614,204 $ ( 22,809 ) $ ( 598,507 ) $ ( 42,696 ) $ ( 49,801 )

18 unchanged sentences

Balance, June 30, 2023 73,113,333 $ 7 $ 579,378 $ ( 11,118 ) $ ( 487,635 ) $ 80,632

Net loss — — — — ( 22,251 ) ( 22,251 )

Issuance of common stock to directors 3,936 — — — — —

Vesting of restricted stock units 92,722 — ( 2,465 ) — — ( 2,465 )

Exercise of stock options 14,039 — 105 — — 105

Stock-based compensation expense — — 11,011 — — 11,011

Other comprehensive income

— — — 1,069 — 1,069

Balance, September 30, 2023

73,224,030 $ 7 $ 588,029 $ ( 10,049 ) $ ( 509,886 ) $ 68,101

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

2 unchanged sentences

(unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

Net loss $ ( 78,615 ) $ ( 101,435 )

Adjustments to reconcile net loss to net cash provided by (used by) operating activities

Adjustments to reconcile net loss to net cash used by operating activities

Stock-based compensation 30,011 33,215

14 unchanged sentences

Operating lease assets and liabilities ( 1,788 ) 2,238

Net cash provided by (used by) operating activities

Net cash used by operating activities

( 6,993 ) ( 102,198 )

3 unchanged sentences

Purchases of property and equipment ( 3,287 ) ( 8,278 )

Net cash used by investing activities

Net cash (used by) provided by investing activities

( 34,294 ) 869

8 unchanged sentences

( 8,496 ) 82,388

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

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

Effect of foreign exchange rate changes on cash and cash equivalents ( 375 ) ( 679 )

Net decrease in cash and cash equivalents ( 50,158 ) ( 19,620 )

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

Cash, cash equivalents, and restricted cash at end of period $ 120,787 $ 173,802

Cash and cash equivalents at end of period $ 99,193 $ 130,761

Supplemental disclosure of cash flow information

7 unchanged sentences

Organization and Description of Business

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

The Appian AI Process 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.

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

The Appian Platform empowers leaders to design, automate, and optimize important processes from start to finish.

With our industry-leading platform and commitment to customer success, Appian is trusted by top organizations to drive transformational process change.

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.

19 unchanged sentences

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 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.

Revenue generated from U.S.

federal government agencies represented 23.2 % and 22.5 % of our revenue for the three and nine months ended September 30, 2024, respectively.

Additionally, 36.3 % and 37.2 % of our revenue during the three and nine months ended September 30, 2024, respectively, was generated from international customers.

Revenue generated from U.S.

federal government agencies represented 21.1 % and 20.6 % of our revenue for the three and nine months ended September 30, 2023, respectively.

Additionally, 35.3 % and 35.6 % of our revenue during the three and nine months ended September 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 nine months ended September 30, 2024 or 2023.

As of September 30, 2024, we had one customer whose balance comprised 22 % 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):

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

September 30, 2024 December 31, 2023 September 30, 2023 December 31, 2022

Cash and cash equivalents $ 99,193 $ 149,351 $ 130,761 $ 148,132

6 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 $ 2.7 million and $ 2.6 million as of June 30, 2024 and December 31, 2023, respectively.

The allowance for doubtful accounts totaled $ 2.9 million and $ 2.6 million as of September 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 $ 11.5 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.

Total commission expense was $ 12.6 million and $ 35.5 million for the three and nine months ended September 30, 2024, respectively.

Total commission expense was $ 11.3 million and $ 33.5 million for the three and nine months ended September 30, 2023, respectively.

Property and Equipment

8 unchanged sentences

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

We incurred severance costs of $ 5.5 million during the nine months ended September 30, 2024.

No severance costs were incurred during the three months ended September 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.

Severance costs related to prior actions totaled $ 6.3 million for the nine months ended September 30, 2023.

No severance costs were incurred during the three months ended September 30, 2023.

Treasury Stock

We account for treasury stock under the cost method.

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.

During the three and nine months ended September 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.

21 unchanged sentences

We are currently evaluating the impact these rules will have on our financial statements and related disclosures and will monitor the litigation progress for possible impacts on the disclosure requirements under the rules.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement.

The new guidance will be effective beginning with our annual reporting for fiscal year 2027 and for interim period reporting beginning in fiscal year 2028.

Companies have the option to apply the guidance either on a retrospective or prospective basis, and early adoption is permitted.

We are currently evaluating the impact this standard will have on our financial statement presentation and disclosures.

Revenue Recognition

1 unchanged sentence

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

The following table summarizes revenue 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,

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

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

2024 2023 2024 2023

49 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 six months ended June 30, 2024 and 2023 was immaterial.

The amount of variable consideration excluded from the transaction price for the three and nine months ended September 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):

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

September 30, 2024 December 31, 2023 September 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 $ 166.6 million and $ 141.3 million for the six months ended June 30, 2024 and 2023, respectively.

Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $ 213.2 million and $ 177.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

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

As of September 30, 2024, we had an aggregate transaction price of $ 470.4 million allocated to unsatisfied performance obligations.

We expect to recognize $ 321.5 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

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

As of September 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 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,

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

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

2024 2023 2024 2023

3 unchanged sentences

Total $ 4,161 $ 4,020 $ 12,395 $ 11,084

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.

Sublease income totaled $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2024, respectively.

Sublease income totaled $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2023, respectively.

Lease Impairment Charges

1 unchanged sentence

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.

During the nine months ended September 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.

No impairment charges were incurred during the three months ended September 30, 2024.

The non-cash lease impairment charges represent the amount 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.

1 unchanged sentence

Supplemental Lease Information

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

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

September 30, 2024 December 31, 2023

Right-of-use assets for operating leases $ 32,231 $ 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 and six months ended June 30, 2024 and 2023 is shown below (in thousands):

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

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

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

2024 2023 2024 2023

2 unchanged sentences

Interest expense on operating lease liabilities 1,579 1,667 4,803 4,714

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):

There were no TIA reimbursements for the three and nine months ended September 30, 2024, while TIA reimbursements totaled $ 1.0 million and $ 2.6 million for the three and nine months ended September 30, 2023, respectively.

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

Operating Leases

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

2024 (excluding the nine months ended September 30, 2024)

Thereafter 34,839

3 unchanged sentences

Goodwill and Intangible Assets

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):

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

Carrying Amount

3 unchanged sentences

Foreign currency translation adjustments 356

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

Balance as of September 30, 2024

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

September 30, 2024 December 31, 2023

Developed technology $ 7,184 $ 7,091

3 unchanged sentences

Intangible assets, net $ 2,790 $ 3,889

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):

Intangible amortization expense was $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 1.9 years and 6.6 years, respectively.

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

Projected Amortization

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

2024 (excluding the nine months ended September 30, 2024)

Thereafter 210

1 unchanged sentence

Property and Equipment, net

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

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

September 30, 2024 December 31, 2023

Leasehold improvements $ 54,660 $ 53,313

1 unchanged sentence

Computer software and hardware

10,397 10,491

Internally developed software

3 unchanged sentences

Property and equipment, net $ 39,190 $ 42,682

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.

Depreciation expense totaled $ 2.2 million and $ 6.4 million for the three and nine months ended September 30, 2024, respectively.

Depreciation expense totaled $ 2.0 million and $ 5.9 million for the three and nine months ended September 30, 2023, respectively.

We disposed of $ 1.0 million and $ 1.3 million worth of fully depreciated equipment during the three and nine months ended September 30, 2024, respectively.

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

Accrued Expenses

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

June 30, 2024 December 31, 2023

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

September 30, 2024 December 31, 2023

Hosting costs $ 3,029 $ 2,973

20 unchanged sentences

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

June 30, 2024 December 31, 2023

September 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 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.

As of September 30, 2024, we had $ 62.0 million outstanding under our $ 100.0 million revolving credit facility, and we had outstanding letters of credit totaling $ 14.7 million in connection with securing our leased office space.

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

1 unchanged sentence

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

For the three and nine months ended September 30, 2024, the actual effective tax rates were ( 168.9 )% and ( 0.9 )%, respectively.

For the three and nine months ended September 30, 2023, the actual effective tax rates were ( 0.8 )% and ( 2.2 )%, respectively.

As of September 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.

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 consolidated financial statements.

12 unchanged sentences

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

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.

As of September 30, 2024, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $ 7.1 million and will be recognized over a weighted average period of 1.5 years.

Total unrecognized compensation cost related to unvested RSUs was approximately $ 34.6 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 and six months ended June 30, 2024 and 2023 (in thousands):

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

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

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

2024 2023 2024 2023

13 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 and Six Months Ended June 30,

Three and Nine Months Ended September 30,

Stock options 2,518,342 2,611,247

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

Spending under this agreement for the three and nine months ended September 30, 2024 totaled $ 10.8 million and

$ 31.8 million, respectively.

Spending under this agreement for the three and nine months ended September 30, 2023 totaled $ 9.3 million and $ 27.8 million, respectively.

The timing of payments under the agreement may vary.

16 unchanged sentences

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.

On August 29, 2024, Appian submitted a petition to the Supreme Court of Virginia seeking to reverse the Court of Appeals decision and reinstate the full judgment against Pegasystems.

Pegasystems filed an opposition to the petition and cross-issues for appeal on October 21, 2024.

The timeline to hear Appian’s petition is 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.

4 unchanged sentences

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.

We currently estimate the total length of the appeals process (solely for amortization purposes) to be approximately four years .

This estimate is reviewed 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 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.

JPI amortization expense was $ 3.6 million and $ 12.6 million for the three and nine months ended September 30, 2024.

JPI amortization expense was $ 1.5 million for the three and nine months ended September 30, 2023.

As of September 30, 2024, $ 12.5 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 26.1 million is classified as 'Other assets’ on our consolidated balance sheets.

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

As of September 30, 2024, shareholders’ equity included 72.4 million shares outstanding, net of 1.1 million shares of common stock held in treasury.

Segment and Geographic Information

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,

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

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

2024 2023 2024 2023

3 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 June 30, 2024 were $ 31.8 million and $ 12.1 million, respectively.

The value of our long-lived assets, which are comprised of property and equipment, intangible assets with finite lives, and right-of-use assets, held in the United States and internationally as of September 30, 2024 were $ 57.3 million and $ 16.9 million, respectively.

As of December 31, 2023, our long-lived assets held in the United States and internationally were $ 67.6 million and $ 18.9 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 June 30, 2024 and December 31, 2023.

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of September 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 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.

The carrying amounts of our accounts receivable, accounts payable, and accrued expenses approximate fair value as of September 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.

1 unchanged sentence

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.

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

As of June 30, 2024

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

As of September 30, 2024

Fair Value Measurement Balance Sheet Classification

19 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 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.

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

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

Interest income on our investments totaled $ 1.5 million and $ 5.2 million for the three and nine months ended September 30, 2024, respectively.

Interest income on our investments totaled $ 2.4 million and $ 7.1 million for the three and nine months ended September 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.

The contractual maturities of our debt securities as of September 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