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Item 8. Financial Statements and Supplementary Data

2025-02-19 compared with 2024-02-15 · 168 added, 142 removed, 928 unchanged (25% of the section changed)

6 unchanged sentences

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Stockholders' Equity

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

5 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Appian Corporation (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Appian Corporation (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

18 unchanged sentences

The Company accounts for individual products and services separately if they are capable of being distinct and are distinct within the context of the contract.

In such cases, the transaction price is allocated to the distinct performance obligations based on their relative standalone selling price or residual approach and revenue is recognized when control of the distinct performance obligation is transferred.

In such cases, the transaction price is allocated to the distinct performance obligations based on their relative standalone selling price, which either is the observable price at which the Company sells the product or service separately, or estimated standalone selling price using a residual approach in the absence of observable pricing.

Revenue is recognized when control of the distinct performance obligation is transferred.

We identified the revenue recognition for certain revenue contracts as a critical audit matter due to the significant management judgment involved in the identification of distinct performance obligations and the allocation of the transaction price to each performance obligation based on its relative standalone selling price.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 15, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 19, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

30 unchanged sentences

Prepaid expenses and other current assets 43,984 49,529

Restricted cash, current — 2,249

Total current assets 435,543 414,355

4 unchanged sentences

Right-of-use assets for operating leases 31,081 39,975

39,975 37,248

Deferred commissions, net of current portion 60,540 59,764

2 unchanged sentences

Total assets $ 621,039 $ 627,503

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ (Deficit) Equity

Current liabilities

3 unchanged sentences

Deferred revenue 281,760 235,992

235,992 194,768

Debt 9,598 66,368

Operating lease liabilities 12,378 11,698

3 unchanged sentences

Non-current operating lease liabilities 52,189 59,067

59,067 57,225

Deferred revenue, non-current 5,477 4,700

Deferred tax liabilities — 2

Other non-current liabilities 431 —

Total liabilities 653,679 575,162

Commitments and contingent liabilities (see Note 13)

Stockholders’ equity

Stockholders’ (deficit) equity

Class A common stock—par value $ 0.0001 ;

5 unchanged sentences

Accumulated deficit ( 612,154 ) ( 519,892 )

Total stockholders’ equity 52,341 145,700

Total liabilities and stockholders’ equity $ 627,503 $ 594,214

Total stockholders’ (deficit) equity

( 32,640 ) 52,341

Total liabilities and stockholders’ (deficit) equity

$ 621,039 $ 627,503

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

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Other non-operating expense

Other (income) expense, net ( 17,603 ) 3,545 3,584

Other expense (income), net 6,773 ( 17,603 ) 3,545

Interest expense 23,582 17,862 1,673

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Foreign currency translation adjustments 11,718 ( 16,326 ) ( 1,559 )

Unrealized gain on available-for-sale securities 17 — —

Total other comprehensive loss, net of income taxes

Unrealized gains on available-for-sale securities 63 17 —

Other comprehensive loss, net of income taxes

$ ( 80,481 ) $ ( 127,750 ) $ ( 152,479 )

1 unchanged sentence

APPIAN CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands, except share data)

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

Common Stock Treasury Stock

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

Shares Amount

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Exercise of stock options 1,543,436 — 44,104 ( 29,643 ) — — 14,461

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

Stock-based compensation expense — — — 39,045 — — 39,045

Other comprehensive loss — — — ( 16,309 ) — ( 16,309 )

Other comprehensive income — — — — 11,781 — 11,781

Balance December 31, 2024 74,028,786 $ 7 $ — $ 591,281 $ ( 11,774 ) $ ( 612,154 ) $ ( 32,640 )

7 unchanged sentences

$ ( 92,262 ) $ ( 111,441 ) $ ( 150,920 )

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

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

Stock-based compensation 39,045 43,387 38,830

1 unchanged sentence

10,030 9,473 7,297

Lease impairment charges 5,462 — —

Bad debt expense 1,760 1,091 1,298

1 unchanged sentence

Loss on disposal of property and equipment

Deferred income taxes ( 1,541 ) ( 1,089 ) ( 498 )

Foreign currency transaction gains, net

Benefit for deferred income taxes

( 899 ) ( 1,541 ) ( 1,089 )

Foreign currency transaction losses (gains), net

16,745 ( 12,263 ) —

Changes in assets and liabilities:

7 unchanged sentences

Operating lease assets and liabilities ( 2,659 ) 2,089 ( 329 )

Net cash used by operating activities

Net cash provided by (used by) operating activities

6,878 ( 110,442 ) ( 106,551 )

2 unchanged sentences

20,038 91,670 84,642

Purchases of investments ( 53,443 ) ( 65,283 ) ( 41,870 )

Payments for investments

( 51,630 ) ( 53,443 ) ( 65,283 )

Purchases of property and equipment ( 3,798 ) ( 9,637 ) ( 9,095 )

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

Net cash provided by investing activities 28,590 10,264 41,936

Net cash (used by) provided by investing activities ( 35,390 ) 28,590 10,264

Cash flows from financing activities:

2 unchanged sentences

Debt repayments ( 6,250 ) ( 3,563 ) ( 625 )

Repurchase of common stock ( 50,019 ) — —

Payments for employee taxes related to the net share settlement of equity awards ( 7,987 ) ( 9,748 ) —

Proceeds from exercise of common stock options 14,461 752 25,432

Net cash provided by financing activities 79,165 142,867 2,786

Net cash (used by) provided by financing activities ( 258 ) 79,165 142,867

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash ( 2,029 ) 1,657 ( 159 )

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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 U.S.

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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 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 of deferred commissions, the amortization period of the cost to obtain the judgment preservation insurance (as discussed in Note 13), and stock-based compensation.

Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance.

We have determined our CODM is our Chief Executive Officer.

We operate one operating and reportable segment, representing our consolidated business that helps organizations build applications and workflows rapidly with our low-code platform to maximize their resources and improve business results.

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 evaluated regularly by our CODM.

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 13), lease impairments, and stock-based compensation.

Revenue Recognition

Refer to Note 3 for a detailed discussion on specific revenue recognition principles related to our major revenue streams.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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;

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No single customer accounted for more than 10% of our total revenue during the years ended December 31, 2024, 2023, and 2022.

As of December 31, 2023, we had one customer whose balance comprised 12.1 % of total accounts receivable.

As of December 31, 2024, we had one reseller whose balance comprised 17.5 % of total accounts receivable.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash, Cash Equivalents, and Restricted Cash

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Restricted cash consisted of cash designated to settle an escrow liability stemming from a holdback agreement related to our acquisition of Lana Labs GmbH.

We paid the remaining amount owed in August 2023.

We paid the remaining amount owed on August 11, 2023.

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

3 unchanged sentences

Restricted cash, current — — 2,249

Restricted cash, non-current — — 2,373

Total cash, cash equivalents, and restricted cash $ 118,552 $ 149,351 $ 150,381

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable 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.

We regularly review the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, and current economic trends.

Accounts Receivable and Allowance for Expected Credit Losses

Accounts receivable and unbilled revenue are stated at realizable value, net of an allowance for expected credit losses.

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

We regularly review the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable economic forecasts that affect collectibility.

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.

8 unchanged sentences

Ending balance $ 3,396 $ 2,606 $ 2,125

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Commissions

1 unchanged sentence

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

Costs to obtain a contract for a new customer or upsell an existing customer are amortized over an estimated economic life of five years as sales commissions on initial sales are not commensurate with sales commissions on contract renewals.

Costs to obtain a contract for a new customer or upsell an existing customer are amortized over an estimated economic life of five years as sales commissions on these types of activities are not commensurate with sales commissions on contract renewals.

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

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

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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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 following table outlines the useful lives of our major asset categories (in years):

Computer software 3

Computer hardware 3

Office furniture and fixtures 10

Leasehold improvements (a)

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

Impairment of Long-Lived Assets

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 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.

Impairment of Goodwill and Long-Lived Assets

Long-lived tangible assets and intangible assets with definite useful lives are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable through undiscounted cash flows from the use of the assets.

If such assets are considered to be impaired, the assets are written down to their estimated fair value.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is accounted for at the segment level and allocated to, and tested for impairment at, a level referred to as the reporting unit.

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otherwise, goodwill must be tested for impairment.

In 2023 and 2022, we elected to not perform the optional qualitative assessment of goodwill and instead performed the quantitative impairment test.

When performing the quantitative test, we determine the fair value of the reporting unit and compare it to the carrying amount, including goodwill.

1 unchanged sentence

We estimate the fair value of our reporting unit using a market-based valuation methodology, which is primarily based on our consolidated market capitalization.

In the fourth quarter of 2023 and 2022, we completed our annual goodwill impairment test for our reporting unit, and the results of the test indicated the estimated fair value of our reporting unit significantly exceeded the carrying value.

In 2024, our qualitative assessment concluded the fair value of our reporting unit is more likely than not higher than its carrying value.

Therefore, we did not perform a quantitative assessment.

No goodwill impairment was identified in the years ended December 31, 2024, 2023, and 2022.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

3 unchanged sentences

For service-based awards such as RSUs, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation and is recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date.

For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation and recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date.

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

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As we reported net losses for all periods presented, all outstanding shares would be considered antidilutive if they were assumed to be vested or exercised.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We use the asset and liability method of accounting for income taxes in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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The estimate of the potential outcome of any uncertain tax issue is subject to our assessment of relevant risks, facts, and circumstances existing at that time.

To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make that determination.

To the extent the

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assessment of such tax position changes, we record the change in estimate in the period in which we make that determination.

Foreign Currency

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Gains and losses on translation of these accounts are accumulated and reported as a separate component of stockholders’ equity and other comprehensive loss.

Gains and losses on foreign currency transactions are recognized in the accompanying consolidated statements of operations as a component of ‘Other (income) expense, net’.

Gains and losses from transactions denominated in foreign currencies resulted in net transaction gains of $ 8.7 million, net transaction losses of $ 6.1 million, and net transaction losses of $ 3.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Gains and losses on foreign currency transactions are recognized in the accompanying consolidated statements of operations as a component of ‘Other expense (income), net’.

Gains and losses from transactions denominated in foreign currencies resulted in net transaction losses of $ 16.8 million, net transaction gains of $ 8.7 million, and net transaction losses of $ 6.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Research and Development Expenses

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Costs incurred after technological feasibility is established are not significant, and accordingly we expense all research and development costs when incurred.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Severance Costs

During the first six months of 2023, we incurred severance costs related to involuntary reductions in our workforce designed to right-size our employee base and improve operations.

Severance costs related to these actions totaled $ 6.3 million for the year ended December 31, 2023.

The majority of the costs incurred were paid to the impacted employees by December 31, 2023.

No severance costs were incurred related to an involuntary reduction in our workforce in 2022 and 2021.

Severance 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.

Severance costs totaled $ 5.5 million and $ 6.3 million for the years ended December 31, 2024 and 2023, respectively.

No severance costs were incurred related to an involuntary reduction in our workforce for the year ended December 31, 2022.

The majority of the severance liability was paid to the impacted employees by December 31, 2024.

Advertising Expenses

1 unchanged sentence

Advertising expenses were $ 3.9 million, $ 4.2 million, and $ 5.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Treasury Stock

We account for treasury stock under the cost method.

In 2024, we reissued treasury stock to satisfy employee stock option exercises and the vesting of restricted stock units as well as for issuances of common stock to our Board of Directors.

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.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

We did not adopt any new accounting guidance in 2023 that 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.

Early adoption is permitted.

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.

This guidance also applies to public entities that have only one segment.

The new ASU will only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

This ASU only impacted our disclosures with no impacts to our results of operations, cash flows, and financial condition.

Refer to Note 14 for further details.

Not Yet Adopted

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.

The new guidance is effective for our annual reporting for fiscal year 2025 on a prospective basis with the option to apply the standard retrospectively.

The new guidance will be effective for our annual reporting for fiscal year 2025 on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

The new ASU will only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

This ASU will only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

In March 2024, the SEC issued its final climate disclosure rule, which requires the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports if they are reasonably likely to have a material impact on the Company’s business.

For large accelerated filers, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025.

Subsequent to issuance, the rules became the subject of litigation, and the SEC has issued a stay to allow the legal process to proceed.

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

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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.

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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.

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Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $ 234.5 million, $ 196.5 million, and $ 147.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Accounts receivable, net of allowance, as of December 31, 2021 was $ 130.0 million.

Transaction Price Allocated to the Remaining Performance Obligations

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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, utilities, and service charges are not included in ROU assets or lease liabilities but rather are expensed as incurred and recorded as variable lease expense.

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.

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.

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Total $ 16,270 $ 14,730 $ 11,350

Sublease income totaled $ 1.3 million and $ 0.4 million for the years ended December 31, 2023 and 2022, respectively.

There was no sublease income for the year ended December 31, 2021.

Sublease income totaled $ 1.3 million, $ 1.3 million, and $ 0.4 million for the years ended December 31, 2024, 2023, and 2022 respectively.

Lease Impairment Charges

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

Pursuant to these initiatives, we 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 year ended December 31, 2024, we recorded non-cash lease impairment charges of $ 5.5 million within general and administrative expenses in our consolidated statements of operations.

These charges represented the amount the carrying value of two asset groups, consisting of two separate floors within our corporate headquarters facility, exceeded their estimated fair values.

The fair values of the two asset groups were

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

measured using discounted cash flow models based on market rents and sublease incomes projected over the remaining lease terms.

No impairment charges were incurred during the years ended December 31, 2023 and 2022.

Supplemental Lease Information

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Interest expense on operating lease liabilities 6,340 6,380 5,406

For each of the years ended December 31, 2023 and 2022, TIA reimbursements totaled $ 2.6 million.

No TIA reimbursements were received during the year ended December 31, 2024.

For each of the years ended December 31, 2023 and 2022, TIA reimbursements totaled $ 2.6 million.

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

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Intangible assets, net $ 2,240 $ 3,889

Intangible amortization expense was $ 1.5 million, $ 1.5 million, and $ 0.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Intangible amortization expense was $ 1.5 million for each of the years ended December 31, 2024, 2023, and 2022.

As of December 31, 2024, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 1.7 years and 6.3 years, respectively.

10 unchanged sentences

Office furniture and fixtures 4,445 3,825

Computer hardware 9,671 9,689

Computer software 820 1,353

Computer software and hardware

Internally developed software

Equipment 191 194

Work in process

Property and equipment, gross 69,251 67,823

2 unchanged sentences

Depreciation expense totaled $ 8.5 million, $ 8.0 million, and $ 5.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

During the years ended December 31, 2023, and 2022, we disposed of or retired $ 1.4 million and $ 1.0 million worth of fully depreciated property and equipment, respectively.

Disposals during the year ended December 31, 2021 were not significant.

During the years ended December 31, 2024, 2023, and 2022, we disposed of or retired $ 1.3 million, $ 1.4 million, and $ 1.0 million worth of fully depreciated property and equipment, respectively.

Accrued Expenses

4 unchanged sentences

Marketing and tradeshow expenses 1,728 685

Audit and tax expenses 1,499 911

Audit and tax fees

Taxes payable 1,285 1,261

7 unchanged sentences

Senior Secured Credit Facilities Credit Agreement

As of December 31, 2023, 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 $ 150.0 million and, in addition, up to $ 75.0 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).

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 $ 200.0 million and, in addition, up to $ 100.0 million for a revolving credit facility, including a letter of credit sub-facility in the aggregate availability amount of $ 20.0 million and a swingline sub-facility in the aggregate availability amount of $ 10.0 million (as a sublimit of the revolving loan facility).

The Credit Agreement matures on November 3, 2027.

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

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 12, 2024, we executed the fourth amendment to the credit agreement which increased the aggregate principal amount of the term loan facility by $ 50.0 million, increased the limit of the revolving credit facility by $ 25.0 million, and amended certain covenants and definitions.

The total aggregate term loan facility is now $ 200.0 million and the revolving credit facility is $ 100.0 million.

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.

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 (“Base Rate”) rate plus 0.50 % or (b) the forward-looking term rate based on the secured overnight financing rate (“Term SOFR”).

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”).

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

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Borrowings under revolving credit facility

$ 62,000 $ 62,000

Secured term loan facility 189,563 145,813

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(1) Deferred debt issuance costs associated with the term loan facility are recorded net of the debt obligation and amortized to interest expense over the term of the Credit Agreement.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the annual maturities of the principal amount of total debt due as of December 31, 2024 (in thousands):

Year Ended December 31,

2025 $ 10,000

Total $ 251,563

* The contractual maturity of our outstanding revolving credit facility of $ 62.0 million is November 3, 2027, and is shown in the table above in fiscal year 2027.

The revolving credit facility is presented as current debt on our consolidated balance sheet due to management’s intention to repay the outstanding balance within the next 12 months.

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

As of December 31, 2023, we had $ 62.0 million outstanding borrowings under our $ 75.0 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 December 31, 2024, we were in compliance with all covenants contained in the Credit Agreement.

In addition, we had $ 62.0 million outstanding borrowings under our $ 100.0 million revolving credit facility, and we had outstanding letters of credit totaling $ 14.6 million in connection with securing our leased office space.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2024, 2023, and 2022, our loss before income taxes was comprised of the following (in thousands):

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Unrecognized tax benefits ( 1.5 ) ( 1.8 ) ( 0.9 )

Global intangible low-taxed income

Change in tax rate 0.8 ( 0.9 ) 0.3

Other ( 0.5 ) 0.2 ( 0.5 )

Return to provision

Deferred adjustments ( 1.4 ) ( 3.0 ) ( 0.8 )

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The effective tax rate of ( 1.2 )% in 2024 includes $ 27.6 million of tax expense attributable to the change in the valuation allowance in the United States and Switzerland, partially offset by $ 6.7 million of favorable tax benefits for research credits.

In 2023, the effective tax rate of ( 3.0 )% included $ 27.3 million of tax expense attributable to the change in the valuation allowance in the United States and Switzerland, partially offset by $ 10.3 million of favorable tax benefits for research credits.

In 2022, the effective tax rate of ( 0.5 )% included $ 39.2 million of tax expense attributable to the change in the valuation allowance in the United States, Switzerland, and Germany partially offset by $ 8.6 million of favorable tax benefits for research credits.

APPIAN CORPORATION

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Additions for tax positions in current years 1,374

Additions for tax positions in prior years 256

Reductions for tax positions in prior years

Reductions due to lapse in statutes of limitations —

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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.

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

Granted 700,000 50.63

Exercised ( 937,217 ) 27.14 32,858

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2,697,959 20.25 5.1 45,862

Granted 700,000 50.63

Exercised ( 98,610 ) 7.56 3,387

Expired ( 7,900 ) 4.06

Forfeited — —

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Exercised ( 1,543,436 ) 9.37 36,383

Expired ( 384 ) 12.00

Forfeited — —

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355,529 $ 11.18 2.1 $ 7,751

No stock options were vested during the year ended December 31, 2023.

The total fair value of stock options that vested during the years ended December 31, 2022 and 2021 was $ 0.9 million and $ 10.8 million, respectively.

No stock options were vested during the year ended December 31, 2024 and 2023.

The total fair value of stock options that vested during the year ended December 31, 2022 was $ 0.9 million.

As of December 31, 2024, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO Grant, was $ 5.9 million.

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We have authorized 500,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each with a par value of $ 0.0001 per share.

As of December 31, 2023, our shares of Class A common stock, which are publicly traded on the Nasdaq Global Market, totaled 42,169,970 issued and outstanding while our Class B common stock, which are not publicly traded, totaled 31,196,796 issued and outstanding.

As of December 31, 2024, our shares of Class A common stock, which are publicly traded on the Nasdaq Global Market, totaled 42,938,701 issued and outstanding while our shares of Class B common stock, which are not publicly traded, totaled 31,090,085 issued and outstanding.

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

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Non-vested restricted stock units 1,146,160 1,078,064 1,190,720

Commitments and Contingencies

Commitments, Contingencies, and Other Matters

Minimum Purchase Commitments

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Specifically, purchase commitments under the agreement total $ 220.0 million over five years .

The agreement, which started July 2021 and is now in its third year as of December 31, 2023, contains minimum spending requirements of $ 28.0 million in each of the third, fourth, and fifth years.

Spending under this agreement for the year ended December 31, 2023, 2022, and 2021 totaled $ 36.6 million, $ 33.1 million, and $ 11.8 million, respectively.

The agreement, which was originated in July 2021 and amended in October 2024, currently contains minimum annual spending requirements of $ 44.0 million from November 2024 to October 2029.

Spending under this agreement for the years ended December 31, 2024, 2023, and 2022 totaled $ 41.2 million, $ 36.6 million, and $ 33.1 million, respectively.

The timing of payments under the agreement may vary.

We expect to meet our minimum annual spending requirement during the term of the arrangement.

APPIAN CORPORATION

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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 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.

Appian's petition was heard on February 11, 2025.

The timeline for rendering a decision is solely 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 consolidated financial statements until all contingencies are resolved and we collect on the judgment.

Judgment Preservation Insurance

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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 December 31, 2023, we estimated the length of the appeals process (solely for amortization purposes) to be approximately three years .

This estimate will be updated each reporting period.

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.

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 $ 6.0 million for the year ended December 31, 2023.

JPI amortization expense was $ 15.8 million and $ 6.0 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, $ 12.5 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 22.9 million is classified as ‘Other assets’ on our consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share Repurchase Program

In February 2024, our Board of Directors authorized a program to repurchase up to $ 50.0 million of our common stock from March 2024 to February 2026.

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 December 31, 2024, shareholders’ equity included 74.0 million shares outstanding, and all treasury shares were reissued.

Segment and Geographic Information

We have determined our CODM is our Chief Executive Officer.

We have one operating and one reportable segment, representing our consolidated business that helps organizations design, automate, and optimize important business processes from start to finish.

We generate revenue from customers primarily through the sale of cloud and term subscriptions bundled with maintenance and support as well as professional services revenue from fees for our consulting services and training related to our platform.

The CODM uses operating loss and net loss reported on the consolidated statements of operations to assess performance for the segment and decide how to allocate resources.

In addition, the CODM reviews the expense categories presented on the consolidated statements of operations to manage the Company’s operations.

Operating loss and net loss are used to evaluate profitability trends in the business, and the CODM considers budget-to-actual variances for both profit measures when making decisions about allocating capital and resources.

Further, the measure of segment assets is total assets as reported on the consolidated balance sheets.

The following table summarizes revenue by geography for the years ended December 31, 2024, 2023, and 2022 (in thousands):

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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 December 31, 2023 were $ 34.0 million and $ 12.6 million, respectively.

The value of our long-lived assets, which are comprised of property and equipment and intangible assets with finite lives as well as right-of-use assets, held in the United States and internationally as of December 31, 2024 were $ 29.6 million and $ 9.8 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.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Retirement Plans

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

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

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs during the years ended December 31, 2024 and 2023.

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

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

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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 restricted cash, accounts receivable, accounts payable, and accrued expenses approximate fair value as of December 31, 2023 and 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.

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

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 Accumulated other comprehensive loss in our consolidated balance sheets.

Changes in the fair value of available-for-sale securities, excluding other-than-temporary impairments, have been recorded in ‘Accumulated other comprehensive loss’ in our consolidated balance sheets.

The components of our investments as of December 31, 2024 and 2023 are as follows (in thousands):

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Treasury bonds Level 1 24,376 26 24,402 — 24,402

Agency bonds Level 2 4,828 ( 3 ) 4,825 — 4,825

Commercial paper Level 2 2,974 3 2,977 — 2,977

Corporate bonds Level 2 13,900 29 13,929 — 13,929

Total investments $ 159,802 $ 58 $ 159,860 $ 118,552 $ 41,308

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Treasury bonds Level 1 4,830 ( 2 ) 4,828 — 4,828

Commercial paper Level 2 26,704 — 26,704 — 26,704

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

Level 2 4,828 ( 3 ) 4,825 — 4,825

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Additionally, there were no transfers between Levels 1 and 2 during the years ended December 31, 2024 and 2023.

APPIAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest income on our investments totaled $ 9.0 million and $ 0.9 million for the years ended December 31, 2023 and 2022, respectively.

Interest income on investments was immaterial for the year ended December 31, 2021.

Interest income on our investments totaled $ 6.8 million, $ 9.0 million, and $ 0.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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

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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-K

Item 8. Financial Statements and Supplementary Data