What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 131 added, 194 removed, 479 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except par value and share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets

1 unchanged sentence

Short-term investments and marketable securities 64,716 41,308

Accounts receivable, net of allowances of $ 2,850 and $ 2,606 , respectively

Accounts receivable, net of allowance of $ 2,323 and $ 3,396 , respectively

136,037 195,069

11 unchanged sentences

Total assets $ 592,899 $ 621,039

Liabilities and Stockholders’ (Deficit) Equity

Liabilities and Stockholders’ Deficit

Current liabilities

10 unchanged sentences

Deferred revenue, non-current 3,944 5,477

Deferred tax liabilities — 2

Other non-current liabilities 374 431

Total liabilities 624,644 653,679

Stockholders’ (deficit) equity

Stockholders’ deficit

Class A common stock—par value 0.0001 ;

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

500,000,000 shares authorized as of March 31, 2025 and December 31, 2024 and 43,132,115 and 42,938,701 shares issued as of March 31, 2025 and December 31, 2024, respectively

Class B common stock—par value 0.0001 ;

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

100,000,000 shares authorized as of March 31, 2025 and December 31, 2024 and 31,088,085 and 31,090,085 shares issued as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 597,086 591,281

1 unchanged sentence

Accumulated deficit ( 613,331 ) ( 612,154 )

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

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

Total liabilities and stockholders’ (deficit) equity $ 549,913 $ 627,503

Total stockholders’ deficit ( 31,745 ) ( 32,640 )

Total liabilities and stockholders’ deficit $ 592,899 $ 621,039

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

2 unchanged sentences

(unaudited, in thousands, except per share data)

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

2024 2023 2024 2023

Three months ended March 31,

Subscriptions $ 134,352 $ 117,694

17 unchanged sentences

Loss before income taxes ( 436 ) ( 33,388 )

Income tax expense 1,319 178 690 2,137

Income tax expense (benefit) 741 ( 465 )

Net loss $ ( 1,177 ) $ ( 32,923 )

7 unchanged sentences

(unaudited, in thousands)

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

2024 2023 2024 2023

Three Months Ended March 31,

Net loss $ ( 1,177 ) $ ( 32,923 )

1 unchanged sentence

Foreign currency translation adjustments ( 3,716 ) 12,843

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

Unrealized (loss) gains on available-for-sale securities

Other comprehensive loss, net of income taxes $ ( 4,910 ) $ ( 20,076 )

1 unchanged sentence

APPIAN CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(unaudited, in thousands, except share data)

Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury Stock

Total Stockholders' Equity (Deficit)

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

Shares Amount

5 unchanged sentences

Exercise of stock options 18,953 — 190 — — 190

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

Stock-based compensation expense — — 8,814 — — 8,814

Other comprehensive income — — — 12,847 — — 12,847

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

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

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

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

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

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

Other comprehensive loss

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

— — — ( 3,733 ) — ( 3,733 )

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

Balance, March 31, 2025

74,220,200 $ 7 $ 597,086 $ ( 15,507 ) $ ( 613,331 ) $ ( 31,745 )

Treasury Stock

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

Shares Amount

5 unchanged sentences

Exercise of stock options 43,460 — — 345 — — 345

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

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

Balance, March 31, 2023

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

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

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

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

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

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

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

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

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

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

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

Other comprehensive income — — — — 12,847 — 12,847

— — — 1,069 — 1,069

Balance, September 30, 2023

Balance, March 31, 2024

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

3 unchanged sentences

(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

Net loss $ ( 1,177 ) $ ( 32,923 )

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

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

Stock-based compensation 10,039 10,606

Depreciation expense and amortization of intangible assets 2,446 2,361

Lease impairment charges 5,462 —

Bad debt expense ( 125 ) ( 135 )

Amortization of debt issuance costs 150 140

Loss on disposal of property and equipment — —

Benefit for deferred income taxes ( 163 ) ( 450 )

Foreign currency transaction losses, net 2,895 —

Foreign currency transaction (gains) losses, net ( 3,989 ) 11,806

Changes in assets and liabilities

7 unchanged sentences

Operating lease assets and liabilities ( 838 ) ( 232 )

Net cash used by operating activities

Net cash provided by operating activities

44,966 18,866

1 unchanged sentence

Proceeds from maturities of investments 13,611 9,657

Payments for investments ( 42,638 ) ( 53,443 )

Purchases of investments ( 37,037 ) —

Purchases of property and equipment ( 651 ) ( 2,198 )

8 unchanged sentences

Proceeds from exercise of common stock options 190 345

Net cash (used by) provided by financing activities

Net cash used by financing activities

( 5,509 ) ( 4,249 )

Effect of foreign exchange rate changes on cash and cash equivalents 1,050 ( 1,319 )

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

Net increase in cash and cash equivalents 16,430 20,757

Cash and cash equivalents at beginning of period

118,552 149,351

Cash and cash equivalents at end of period $ 134,982 $ 170,108

8 unchanged sentences

Organization and Description of Business

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.

Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we,” or “our”) is “The Process Company”.

We deliver a software platform that helps organizations run better processes that reduce costs, improve customer experiences, and gain a strategic edge.

Committed to client success, we serve many of the world’s largest companies across various industries.

We believe processes define each organization.

Processes are how they operate, deliver value, and interact with their customers.

Appian has both the platform and the expertise to enable enterprise transformation.

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.

3 unchanged sentences

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

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

All intercompany accounts and transactions have been eliminated in consolidation.

5 unchanged sentences

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

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

Revenue Recognition

5 unchanged sentences

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

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

We consider all highly liquid investments with original maturities of three months or less, as well as overnight repurchase agreements, to be cash equivalents.

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 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):

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

For the three months ended March 31, 2025, revenue generated from government agencies represented 33.4 % of total revenue, of which revenue from U.S.

federal government agencies was 23.9 % of total revenue.

For the three months ended March 31, 2024, revenue generated from government agencies represented 29.5 % of total revenue, of which revenue from U.S.

federal government agencies was 21.7 % of total revenue.

Additionally, 36.2 % and 37.2 % of our revenue during the three months ended March 31, 2025 and 2024, respectively, was generated from international customers.

No single end-customer accounted for more than 10% of our total revenue in the three months ended March 31, 2025 or 2024.

As of March 31, 2025 and 2024, we had one reseller whose balance comprised 12.2 % and 11.5 % of total accounts receivable, respectively.

Cash and Cash Equivalents

Restricted cash, current — — — 2,249

Total cash, cash equivalents, and restricted cash $ 99,193 $ 149,351 $ 130,761 $ 150,381

We consider all highly liquid investments with original maturities of three months or less, as well as overnight repurchase agreements, to be cash equivalents.

Allowance for Doubtful Accounts

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

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

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

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.

The allowance for doubtful accounts totaled $ 2.9 million and $ 2.6 million as of September 30, 2024 and December 31, 2023, respectively.

The allowance for doubtful accounts totaled $ 2.3 million and $ 3.4 million as of March 31, 2025 and December 31, 2024, respectively.

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 subscriptions contract for a new customer or upsell an existing subscriptions 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.

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

3 unchanged sentences

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

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.

Total commission expense was $ 12.2 million and $ 11.4 million for the three months ended March 31, 2025 and 2024, respectively.

Property and Equipment

4 unchanged sentences

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

Severance Costs

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

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

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

We 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.

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 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.

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 were recorded as a decrease to additional-paid-in-capital in our consolidated balance sheets.

Recent Accounting Pronouncements

1 unchanged sentence

Not Yet Adopted

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

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.

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.

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

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

4 unchanged sentences

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):

6 unchanged sentences

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

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

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

2024 2023 2024 2023

The following table summarizes revenue recorded during the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Cloud subscriptions $ 99,826 $ 86,603

48 unchanged sentences

Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur.

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

The amount of variable consideration excluded from the transaction price for the three months ended March 31, 2025 and 2024 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):

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

March 31, 2025 December 31, 2024 March 31, 2024 December 31, 2023

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 $ 213.2 million and $ 177.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Revenue recognized from amounts included in contract liabilities at the beginning of the period totaled $ 118.2 million and $ 94.2 million for the three months ended March 31, 2025 and 2024, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

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

As of March 31, 2025, we had an aggregate transaction price of $ 519.1 million allocated to unsatisfied performance obligations.

We expect to recognize $ 331.9 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.

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

As of March 31, 2025, 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 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

The following table sets forth the components of lease expense for the three months ended March 31, 2025 and 2024 (in thousands, exclusive of sublease income):

Three Months Ended March 31,

Operating lease cost $ 2,393 $ 2,411

2 unchanged sentences

Total $ 4,015 $ 4,056

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

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

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

During the 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.

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

Sublease income totaled $ 0.3 million for each of the three months ended March 31, 2025 and 2024.

Supplemental Lease Information

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

Supplemental balance sheet information related to operating leases as of March 31, 2025 and December 31, 2024 is presented in the following table (in thousands, except for lease term and discount rate):

March 31, 2025 December 31, 2024

Right-of-use assets for operating leases $ 31,645 $ 31,081

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 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

Supplemental cash flow and expense information related to operating leases for the three months ended March 31, 2025 and 2024 is shown below (in thousands):

Three Months Ended March 31,

Operating cash outflows for operating leases $ 3,193 $ 2,643

1 unchanged sentence

Interest expense on operating lease liabilities 1,483 1,629

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):

There were no TIA reimbursements for the three months ended March 31, 2025 or 2024.

A summary of our future minimum lease commitments under non-cancellable leases as of March 31, 2025 is shown below (in thousands):

Operating Leases

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

2025 (excluding the three months ended March 31, 2025)

Thereafter 22,905

3 unchanged sentences

Goodwill and Intangible Assets

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):

The following table details the changes in goodwill during the three months ended March 31, 2025 and fiscal year ended December 31, 2024 (in thousands):

Carrying Amount

3 unchanged sentences

Foreign currency translation adjustments 991

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

Balance as of March 31, 2025

Intangible assets, net consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Developed technology $ 6,944 $ 6,685

3 unchanged sentences

Intangible assets, net $ 2,032 $ 2,240

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):

Intangible amortization expense was $ 0.3 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 1.4 years and 6.1 years, respectively.

The following table shows the projected annual amortization expense related to amortizable intangible assets as of March 31, 2025 (in thousands):

Projected Amortization

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

2025 (excluding the three months ended March 31, 2025)

Thereafter 110

1 unchanged sentence

Property and Equipment, net

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

Property and equipment, net consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Leasehold improvements $ 55,045 $ 54,088

3 unchanged sentences

Equipment 199 191

Work in process

Property and equipment, gross 70,656 69,251

1 unchanged sentence

Property and equipment, net $ 36,330 $ 37,109

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.

Depreciation expense totaled $ 2.2 million and $ 2.0 million for the three months ended March 31, 2025 and 2024, respectively.

We had no disposals or retirements during the three months ended March 31, 2025 or 2024.

Accrued Expenses

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

September 30, 2024 December 31, 2023

Accrued expenses consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Hosting costs $ 3,825 $ 3,047

20 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Borrowings under revolving credit facility

8 unchanged sentences

(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.

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

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.

As of March 31, 2025, one of our bank accounts exceeded its permitted cash threshold under the Credit Agreement due to customer payments that were received just prior to quarter end, resulting in a covenant violation.

We promptly cured the matter by transferring cash to be within the permitted threshold and obtained a waiver from our lenders waiving their rights to call our obligations under the Credit Agreement.

As a result, we are currently in compliance with all covenants contained in the Credit Agreement.

As of March 31, 2025, we had $ 62.0 million outstanding 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.

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 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.

For the three months ended March 31, 2025 and 2024, the actual effective tax rates were ( 170.0 )% and 1.4 %, respectively.

As of March 31, 2025, our net unrecognized tax benefits totaled $ 7.8 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 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.

As of March 31, 2025, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $ 4.6 million and will be recognized over a weighted average period of 1.0 years.

Total unrecognized compensation cost related to unvested RSUs was approximately $ 36.6 million, which will be recognized over a weighted average period of 1.6 years.

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

In 2025, we changed our annual bonus program to provide eligible employees with the option to receive all or a portion of their earned annual bonuses for 2025, otherwise payable in cash, in the form of RSUs.

The RSUs will be granted by our Board of Directors during the first quarter of 2026 and will be fully vested upon grant.

The portion of the 2025 annual bonus to be paid in the form of RSUs is recorded as stock-based compensation expense while the related obligations are recorded as liabilities in the ‘Accrued compensation and related benefits’ line item on our consolidated balance sheets.

During the three months ended March 31, 2025, we recognized $ 1.2 million of stock-based compensation related to this program.

The following table summarizes the components of our stock-based compensation expense for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Cost of revenue

12 unchanged sentences

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

Three and Nine Months Ended September 30,

Three Months Ended March 31,

Stock options 1,036,576 2,555,509

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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 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 agreement, which originated in July 2021 and was 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 three months ended March 31, 2025 and 2024 totaled $ 10.4 million and $ 10.3 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.

Exclusive of the AWS contract, we have other non-cancellable agreements for subscription software products that contain provisions stipulating minimum purchase commitments.

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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.

Pegasystems filed an

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

On March 7, 2025, the Supreme Court of Virginia granted Appian’s petition and agreed to hear Appian’s appeal as well as Pegasystems’ cross-issues for appeal.

The timeline for hearing Appian’s appeal 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.

7 unchanged sentences

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

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.

JPI amortization expense was $ 3.1 million and $ 4.5 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, $ 12.5 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 19.8 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 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 nine months ended September 30, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

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 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.

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.

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 three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Domestic $ 106,193 $ 94,113

2 unchanged sentences

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

The value of our long-lived assets, which are comprised of property and equipment, 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.

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 March 31, 2025 were $ 54.1 million and $ 15.9 million, respectively.

As of December 31, 2024, our long-lived assets held in the United States and internationally were $ 55.9 million and $ 14.6 million, respectively.

9 unchanged sentences

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

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

There were no instruments measured at fair value on a recurring basis using significant unobservable inputs as of March 31, 2025 and December 31, 2024.

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 September 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 March 31, 2025 and December 31, 2024 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 September 30, 2024 are as follows (in thousands):

As of September 30, 2024

The components of our cash, cash equivalents, and investments as of March 31, 2025 are as follows (in thousands):

As of March 31, 2025

Fair Value Measurement Balance Sheet Classification

17 unchanged sentences

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

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 September 30, 2024 and December 31, 2023 were all one year or less.

We did not hold any Level 3 assets at any point during the three months ended March 31, 2025.

Additionally, there were no transfers between Levels 1 and 2 during the three months ended March 31, 2025.

Interest income on our investments, which is recorded within ‘Other operating (income) expense’ on our consolidated statements of operations, totaled $ 1.6 million and $ 1.9 million for the three months ended March 31, 2025 and 2024, respectively.

The contractual maturities of our debt securities as of March 31, 2025 and December 31, 2024 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