Item 1. Financial Statements
Item 1. FINANCIAL STATEMENTS
APPIAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share data)
As of
June 30, 2025 December 31, 2024
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 112,207 $ 118,552
Short-term investments and marketable securities 72,546 41,308
Accounts receivable, net of allowance of $ 2,705 and $ 3,396 , respectively
151,202 195,069
Deferred commissions, current 34,577 36,630
Prepaid expenses and other current assets 41,149 43,984
Total current assets 411,681 435,543
Property and equipment, net of accumulated depreciation of $ 36,719 and $ 32,142 , respectively
34,799 37,109
Goodwill 28,763 25,555
Intangible assets, net of accumulated amortization of $ 6,650 and $ 5,341 , respectively
1,882 2,240
Right-of-use assets for operating leases 30,951 31,081
Deferred commissions, net of current portion 59,366 60,540
Deferred tax assets 5,176 4,129
Other assets 18,130 24,842
Total assets $ 590,748 $ 621,039
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable $ 8,881 $ 4,322
Accrued expenses 14,547 11,388
Accrued compensation and related benefits 34,414 34,223
Deferred revenue 264,917 281,760
Debt 9,598 9,598
Operating lease liabilities 13,052 12,378
Other current liabilities 1,952 1,087
Total current liabilities 347,361 354,756
Long-term debt 236,027 240,826
Non-current operating lease liabilities 49,810 52,189
Deferred revenue, non-current 10,798 5,477
Other non-current liabilities 493 431
Total liabilities 644,489 653,679
Stockholders’ deficit
Class A common stock—par value 0.0001 ; 500,000,000 shares authorized as of June 30, 2025 and December 31, 2024 and 43,245,763 and 42,938,701 shares issued as of June 30, 2025 and December 31, 2024, respectively
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Class B common stock—par value 0.0001 ; 100,000,000 shares authorized as of June 30, 2025 and December 31, 2024 and 31,088,085 and 31,090,085 shares issued as of June 30, 2025 and December 31, 2024, respectively
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Treasury stock at cost, 313,160 shares as of June 30, 2025
( 10,000 ) —
Additional paid-in capital 605,084 591,281
Accumulated other comprehensive loss ( 35,189 ) ( 11,774 )
Accumulated deficit ( 613,643 ) ( 612,154 )
Total stockholders’ deficit ( 53,741 ) ( 32,640 )
Total liabilities and stockholders’ deficit $ 590,748 $ 621,039
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Revenue
Subscriptions $ 132,657 $ 112,974 $ 267,009 $ 230,668
Professional services 37,983 33,476 70,057 65,617
Total revenue 170,640 146,450 337,066 296,285
Cost of revenue
Subscriptions 17,154 13,262 32,048 25,532
Professional services 26,767 26,151 50,791 51,878
Total cost of revenue 43,921 39,413 82,839 77,410
Gross profit 126,719 107,037 254,227 218,875
Operating expenses
Sales and marketing 60,458 66,592 115,011 124,748
Research and development 40,347 39,446 79,864 79,217
General and administrative 36,898 40,193 71,170 73,639
Total operating expenses 137,703 146,231 266,045 277,604
Operating loss ( 10,984 ) ( 39,194 ) ( 11,818 ) ( 58,729 )
Other non-operating (income) expense
Other (income) expense, net ( 17,564 ) ( 1,545 ) ( 23,280 ) 6,662
Interest expense 5,319 6,107 10,637 11,753
Total other non-operating (income) expense ( 12,245 ) 4,562 ( 12,643 ) 18,415
Income (loss) before income taxes
1,261 ( 43,756 ) 825 ( 77,144 )
Income tax expense (benefit) 1,573 ( 164 ) 2,314 ( 629 )
Net loss $ ( 312 ) $ ( 43,592 ) $ ( 1,489 ) $ ( 76,515 )
Net loss per share:
Basic and diluted $ ( 0.00 ) $ ( 0.60 ) $ ( 0.02 ) $ ( 1.05 )
Weighted average common shares outstanding:
Basic and diluted 74,202 72,300 74,148 72,800
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited, in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Net loss $ ( 312 ) $ ( 43,592 ) $ ( 1,489 ) $ ( 76,515 )
Comprehensive loss, net of income taxes
Foreign currency translation adjustments ( 19,641 ) ( 1,097 ) ( 23,357 ) 11,746
Unrealized loss on available-for-sale securities
( 41 ) ( 7 ) ( 58 ) ( 3 )
Other comprehensive loss, net of income taxes $ ( 19,994 ) $ ( 44,696 ) $ ( 24,904 ) $ ( 64,772 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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APPIAN CORPORATION
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' Deficit
Common Stock
Shares Amount
Balance, December 31, 2024
74,028,786 $ 7 $ 591,281 $ ( 11,774 ) $ ( 612,154 ) $ — $ ( 32,640 )
Net loss — — — — ( 1,177 ) — ( 1,177 )
Issuance of common stock to directors 4,735 — — — — — —
Vesting of restricted stock units 167,726 — ( 3,199 ) — — — ( 3,199 )
Exercise of stock options 18,953 — 190 — — — 190
Stock-based compensation expense — — 8,814 — — — 8,814
Other comprehensive loss — — — ( 3,733 ) — — ( 3,733 )
Balance, March 31, 2025
74,220,200 $ 7 $ 597,086 $ ( 15,507 ) $ ( 613,331 ) $ — $ ( 31,745 )
Net loss — — — — ( 312 ) — ( 312 )
Issuance of common stock to directors 5,686 — — — — — —
Vesting of restricted stock units 77,082 — ( 1,269 ) — — — ( 1,269 )
Exercise of stock options 30,880 — 314 — — — 314
Repurchase of common stock ( 313,160 ) — — — — ( 10,000 ) ( 10,000 )
Stock-based compensation expense — — 8,953 — — — 8,953
Other comprehensive loss — — — ( 19,682 ) — — ( 19,682 )
Balance, June 30, 2025
74,020,688 $ 7 $ 605,084 $ ( 35,189 ) $ ( 613,643 ) $ ( 10,000 ) $ ( 53,741 )
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Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury Stock
Total Stockholders' Equity (Deficit)
Common Stock
Shares Amount
Balance, December 31, 2023
73,366,766 $ 7 $ 595,781 $ ( 23,555 ) $ ( 519,892 ) $ — $ 52,341
Net loss — — — — ( 32,923 ) — ( 32,923 )
Issuance of common stock to directors 4,974 — — — — — —
Vesting of restricted stock units 141,563 — ( 2,862 ) — — — ( 2,862 )
Exercise of stock options 43,460 — 345 — — — 345
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
Balance, March 31, 2024
72,236,232 $ 7 $ 603,870 $ ( 10,708 ) $ ( 552,815 ) $ ( 50,019 ) $ ( 9,665 )
Net loss — — — — ( 43,592 ) — ( 43,592 )
Issuance of common stock to directors 4,692 — ( 178 ) — — 178 —
Vesting of restricted stock units 77,116 — ( 4,279 ) — — 2,919 ( 1,360 )
Exercise of stock options 25,037 — ( 785 ) — — 948 163
Stock-based compensation expense — — 9,900 — — — 9,900
Other comprehensive loss — — ( 1,104 ) — — ( 1,104 )
Balance, June 30, 2024
72,343,077 $ 7 $ 608,528 $ ( 11,812 ) $ ( 596,407 ) $ ( 45,974 ) $ ( 45,658 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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APPIAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended June 30,
2025 2024
Cash flows from operating activities
Net loss $ ( 1,489 ) $ ( 76,515 )
Adjustments to reconcile net loss to net cash provided by operating activities
Stock-based compensation 20,732 20,506
Depreciation expense and amortization of intangible assets 4,970 4,941
Lease impairment charges — 5,462
Bad debt expense 550 253
Amortization of debt issuance costs 300 290
Benefit for deferred income taxes ( 689 ) ( 982 )
Foreign currency transaction (gains) losses, net ( 20,659 ) 12,787
Changes in assets and liabilities
Accounts receivable 49,720 37,114
Prepaid expenses and other assets 10,174 10,524
Deferred commissions 3,228 2,897
Accounts payable and accrued expenses 7,559 2,882
Accrued compensation and related benefits ( 3,811 ) ( 3,808 )
Other current and non-current liabilities ( 277 ) 121
Deferred revenue ( 25,611 ) ( 14,267 )
Operating lease assets and liabilities ( 1,671 ) ( 954 )
Net cash provided by operating activities
43,026 1,251
Cash flows from investing activities
Proceeds from maturities of investments 27,985 9,657
Purchases of investments ( 59,281 ) ( 28,354 )
Purchases of property and equipment ( 1,797 ) ( 2,932 )
Net cash used by investing activities
( 33,093 ) ( 21,629 )
Cash flows from financing activities
Proceeds from borrowings — 50,000
Payments for debt issuance costs — ( 463 )
Debt repayments ( 5,000 ) ( 2,500 )
Repurchase of common stock ( 10,000 ) ( 50,019 )
Payments for employee taxes related to the net share settlement of equity awards ( 4,469 ) ( 4,221 )
Proceeds from exercise of common stock options 504 508
Net cash used by financing activities
( 18,965 ) ( 6,695 )
Effect of foreign exchange rate changes on cash and cash equivalents 2,687 ( 1,491 )
Net decrease in cash and cash equivalents ( 6,345 ) ( 28,564 )
Cash and cash equivalents at beginning of period
118,552 149,351
Cash and cash equivalents at end of period $ 112,207 $ 120,787
Supplemental disclosure of cash flow information
Cash paid for interest $ 10,023 $ 11,168
Cash paid for income taxes $ 1,997 $ 1,436
Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures $ 54 $ 182
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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APPIAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Description of Business
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.
2. Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements and footnotes include the accounts of Appian and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial reporting. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ deficit, and cash flows. All intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2025.
Use of Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in these consolidated financial statements and accompanying notes. Although we believe the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.
Significant estimates embedded in the 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), 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.
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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-term investments. Deposits held with banks may exceed the amount of insurance provided on such deposits; however, we believe the financial institutions holding our cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances. With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss.
For the three and six months ended June 30, 2025, revenue generated from government agencies represented 34.1 % and 33.8 % of total revenue, of which revenue from U.S. federal government agencies was 25.9 % and 24.9 % of total revenue, respectively. Additionally, 38.4 % and 37.3 % of our revenue during the three and six months ended June 30, 2025, respectively, was generated from international customers. For the three and six months ended June 30, 2024, revenue generated from government agencies represented 31.4 % and 30.4 % of total revenue, of which revenue from U.S. federal government agencies was 22.6 % and 22.1 % of total revenue, respectively. Additionally, 38.2 % and 37.7 % of our revenue during the three and six months ended June 30, 2024, respectively, was generated from international customers.
No single end-customer accounted for more than 10% of our total revenue in the three and six months ended June 30, 2025 or 2024. As of June 30, 2025 and December 31, 2024, we had one reseller whose accounts receivable balance comprised 15.2 % and 17.5 % of total accounts receivable, respectively.
Cash and Cash Equivalents
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 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 collectability. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for doubtful accounts would be required and would increase bad debt expense. The allowance for doubtful accounts totaled $ 2.7 million and $ 3.4 million as of June 30, 2025 and December 31, 2024, respectively.
Deferred Commissions
We capitalize costs of obtaining a contract with a customer, which consist of sales commissions paid to our sales team and the associated incremental payroll taxes. These costs are recorded as deferred commissions in the consolidated balance sheets. 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. We determine the estimated economic life based on both qualitative and quantitative factors such as expected renewals, product life cycles, contractual terms, and customer attrition. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the estimated economic life. 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.
Amortization associated with deferred commissions is recorded to sales and marketing expense in our consolidated statements of operations. Total commission expense was $ 12.8 million and $ 25.0 million for the three and six months ended June 30, 2025, respectively. Total commission expense was $ 11.5 million and $ 22.9 million for the three and six months ended June 30, 2024, respectively.
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Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred. The estimated useful lives of our property and equipment are generally 3 years for computer software, computer hardware, and internally developed software, 5 years for equipment, and 10 years 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.
Treasury Stock
We account for treasury stock under the cost method. We reissue 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
Adopted
We have not adopted any new accounting guidance in 2025 that has had a material impact on our consolidated financial statements or disclosures.
Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Tax (Topic 740): 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 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. This ASU will only impact our disclosures with no impacts to our results of operations, cash flows, and financial condition.
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.
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3. Revenue
Revenue Recognition
We generate subscriptions revenue primarily through the sale of cloud subscriptions bundled with maintenance and support and hosting services as well as term license subscriptions bundled with maintenance and support. We generate professional services revenue from fees for our consulting services, including application development and deployment assistance as well as training related to our platform.
The following table summarizes revenue recorded during the three and six months ended June 30, 2025 and 2024 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Cloud subscriptions $ 106,915 $ 88,428 $ 206,741 $ 175,031
Term license subscriptions 17,703 17,227 44,617 40,998
Maintenance and support 8,039 7,319 15,651 14,639
Total subscriptions 132,657 112,974 267,009 230,668
Professional services 37,983 33,476 70,057 65,617
Total revenue $ 170,640 $ 146,450 $ 337,066 $ 296,285
Performance Obligations and Timing of Revenue Recognition
We primarily sell products and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (1) capable of being distinct (i.e., the customer can benefit from the product or service on its own or together with readily available resources, including those purchased separately from us) and distinct within the context of the contract (i.e., separately identified from other promises in the contract) or (2) a series of distinct products or services that are substantially the same and have the same pattern of transfer to the customer. Our term license subscriptions are delivered at a point in time while our cloud subscriptions, maintenance and support, and professional services are delivered over time.
Subscriptions Revenue
Subscriptions revenue is primarily related to (1) cloud subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. We generally charge subscription fees on a per-user basis or through non-user-based single application licenses. We bill customers and collect payment for subscriptions to our platform in advance on an annual, quarterly, or monthly basis. In certain instances, our customers have paid their entire contract up front.
Cloud Subscriptions
We generate cloud-based subscriptions revenue primarily from the sales of subscriptions to access our cloud offering, together with related support services to our customers. We perform all required maintenance and support for our cloud offering. Revenue is recognized on a ratable basis over the contract term beginning on the date the service is made available to the customer. Our cloud-based subscription contracts generally have a term of one to three years in length. We bill customers and collect payment for subscriptions to our platform in advance, and they are non-cancellable.
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Term License Subscriptions
Our term license subscriptions revenue is derived from customers with on-premises installations of our platform. 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. If a cloud-based subscription includes the right for the customer to take possession of the license, the revenue is treated as a term license. Revenue from term license subscriptions is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the contract term.
Maintenance and Support
Maintenance and support subscriptions include both technical support and when-and-if-available software upgrades, which are treated as a single performance obligation as they are considered a series of distinct services that are substantially the same and have the same duration and measure of progress. Revenue from maintenance and support is recognized ratably over the contract period, which is the period over which the customer has continuous access to maintenance and support.
Professional Services Revenue
Our professional services revenue is comprised of fees for consulting services, including application development and deployment assistance as well as training services related to our platform. Our professional services are considered distinct performance obligations when sold standalone or with other products.
Consulting Services
We sell consulting services to assist customers in planning and executing the deployment of our software. Customers are not required to use consulting services to fully benefit from the software. Consulting services are regularly sold on a standalone basis and most often as either (1) under a fixed-fee arrangement or (2) on a time and materials basis. 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 other consulting offerings or other products and services. Revenue under consulting contracts is recognized over time as services are delivered. Revenue from subscription-based consulting contracts is recognized ratably over the contract period. For time and materials-based consulting contracts, we have elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of our service to date.
Training Services
We sell various training services to our customers. Training services are sold in the form of prepaid training credits that are redeemed based on a fixed rate per course. Training revenue is recognized when the associated training services are delivered.
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Significant Judgments and Estimates
Determining the Transaction Price
The transaction price is the total amount of consideration we expect to receive in exchange for the service offerings in a contract and may include both fixed and variable components. Variable consideration is included in the transaction price to the extent it is probable a significant reversal will not occur. The amount of variable consideration excluded from the transaction price for the three and six months ended June 30, 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; however, such true-up adjustments are not expected to be material.
Allocating the Transaction Price Based on Standalone Selling Prices (“SSP”)
We allocate the transaction price to each performance obligation in a contract based on its relative SSP. The SSP is the observable price at which we sell the product or service separately. In the absence of observable pricing, we estimate SSP using the residual approach. We establish SSP as follows:
1. Cloud subscriptions - Given the highly variable selling price of our cloud subscriptions, we establish the SSP of our cloud subscriptions using a residual approach after first determining the SSP of consulting and training services. We have concluded the residual approach to estimating the SSP of our cloud subscriptions is an appropriate allocation of the transaction price.
2. Term license subscriptions - Given the highly variable selling price of our term license subscriptions, we have established the SSP of term license subscriptions using a residual approach after first determining the SSP of maintenance and support. Maintenance and support is sold on a standalone basis in conjunction with renewals of our legacy perpetual software licenses and within a narrow range of the net license fee. Because an economic relationship exists between the license and maintenance and support, we have concluded the residual approach to estimating the SSP of term license subscriptions is an appropriate allocation of the transaction price.
3. Maintenance and support - We establish the SSP of maintenance and support as a percentage of the stated net subscription fee based on observable pricing of maintenance and support renewals from our legacy perpetual software licenses.
4. Consulting and training services - The SSP of consulting and training services is established based on the observable pricing of standalone sales within each geographic region where the services are sold.
Contract Balances
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional.
Contract liabilities consist of deferred revenue and include payments received in advance of the satisfaction of performance obligations. Deferred revenue is then recognized as the revenue recognition criteria are met. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.
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The following table sets forth our contract asset and contract liability balances (in thousands):
As of
June 30, 2025 December 31, 2024 June 30, 2024 December 31, 2023
Contract assets, current *
$ 10,376 $ 12,933 $ 8,865 $ 12,052
Contract assets, non-current *
211 643 1,072 915
Total contract assets $ 10,587 $ 13,576 $ 9,937 $ 12,967
Deferred revenue, current $ 264,917 $ 281,760 $ 218,233 $ 235,992
Deferred revenue, non-current 10,798 5,477 4,695 4,700
Total contract liabilities $ 275,715 $ 287,237 $ 222,928 $ 240,692
* 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 $ 202.8 million and $ 166.6 million for the six months ended June 30, 2025 and 2024, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
As of June 30, 2025, we had an aggregate transaction price of $ 553.2 million allocated to unsatisfied performance obligations. We expect to recognize $ 349.7 million of this balance as revenue over the next 12 months with the remaining amount recognized thereafter.
4. Leases
As of June 30, 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.
Lease Costs
Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges, are not included in right-of-use (“ROU”) assets for operating leases or operating 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.
The following table sets forth the components of lease expense for the three and six months ended June 30, 2025 and 2024 (in thousands, exclusive of sublease income):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Operating lease cost $ 2,615 $ 2,410 $ 5,008 $ 4,821
Short-term lease cost 282 433 532 765
Variable lease cost 1,244 1,335 2,616 2,648
Total $ 4,141 $ 4,178 $ 8,156 $ 8,234
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Sublease income totaled $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2025, respectively. Sublease income totaled $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2024, respectively.
Lease Impairment Charges
There were no lease impairment charges during the three and six months ended June 30, 2025.
During the second quarter of 2024, we initiated actions to reduce the footprint of our leased office spaces. During the three months ended June 30, 2024, we recorded non-cash lease impairment charges of $ 5.5 million within general and administrative expenses in our consolidated statements of operations related to the two ROU assets. The non-cash lease impairment charges represent the amount the carrying value of the two asset groups exceeded their estimated fair values. The asset groups represented two separate floors within our corporate headquarters facility. The fair values of the two asset groups were measured using discounted cash flow models based on market rents and sublease incomes projected over the remaining lease terms.
Supplemental Lease Information
Supplemental balance sheet information related to operating leases as of June 30, 2025 and December 31, 2024 is presented in the following table (in thousands, except for lease term and discount rate):
As of
June 30, 2025 December 31, 2024
Right-of-use assets for operating leases $ 30,951 $ 31,081
Operating lease liabilities, current $ 13,052 $ 12,378
Operating lease liabilities, net of current portion 49,810 52,189
Total operating lease liabilities $ 62,862 $ 64,567
Weighted average remaining lease term (in years) 6.0 6.5
Weighted average discount rate 9.4 % 9.4 %
Supplemental cash flow and expense information related to operating leases for the three and six months ended June 30, 2025 and 2024 is shown below (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Operating cash outflows for operating leases $ 3,248 $ 3,130 $ 6,441 $ 5,773
Amortization of operating lease right-of-use assets 947 815 1,857 1,598
Interest expense on operating lease liabilities 1,466 1,595 2,949 3,224
There were no TIA reimbursements for the three and six months ended June 30, 2025 or 2024.
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A summary of our future minimum lease commitments under non-cancellable leases as of June 30, 2025 is shown below (in thousands):
Operating Leases
2025 (excluding the six months ended June 30, 2025)
$ 6,820
2026 13,829
2027 14,015
2028 12,881
2029 12,411
Thereafter 22,908
Total lease payments 82,864
Less: imputed interest ( 20,002 )
Total $ 62,862
5. Goodwill and Intangible Assets
The following table details the changes in goodwill during the six months ended June 30, 2025 and fiscal year ended December 31, 2024 (in thousands):
Carrying Amount
Balance as of December 31, 2023
$ 27,106
Foreign currency translation adjustments ( 1,551 )
Balance as of December 31, 2024
25,555
Foreign currency translation adjustments 3,208
Balance as of June 30, 2025
$ 28,763
Intangible assets, net consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
As of
June 30, 2025 December 31, 2024
Developed technology $ 7,524 $ 6,685
Customer relationships
1,008 896
Intangible assets, gross 8,532 7,581
Less: accumulated amortization ( 6,650 ) ( 5,341 )
Intangible assets, net $ 1,882 $ 2,240
Intangible amortization expense was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2025, respectively. Intangible amortization expense was $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the weighted average remaining amortization periods for developed technology and customer relationships were approximately 1.2 years and 5.8 years, respectively.
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The following table shows the projected annual amortization expense related to amortizable intangible assets as of June 30, 2025 (in thousands):
Projected Amortization
2025 (excluding the six months ended June 30, 2025)
$ 639
2026 822
2027 101
2028 101
2029 101
Thereafter 118
Total projected amortization expense $ 1,882
6. Property and Equipment, net
Property and equipment, net consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
As of
June 30, 2025 December 31, 2024
Leasehold improvements $ 55,523 $ 54,088
Office furniture and fixtures 4,649 4,445
Computer software and hardware
9,536 9,363
Internally developed software
1,154 545
Equipment 201 191
Work in process
455 619
Property and equipment, gross 71,518 69,251
Less: accumulated depreciation ( 36,719 ) ( 32,142 )
Property and equipment, net $ 34,799 $ 37,109
Depreciation expense totaled $ 2.2 million and $ 4.4 million for the three and six months ended June 30, 2025, respectively. Depreciation expense totaled $ 2.2 million and $ 4.2 million for the three and six months ended June 30, 2024, respectively. We had no disposals or retirements during the three and six months ended June 30, 2025. We disposed of $ 0.3 million worth of fully depreciated equipment during the three and six months ended June 30, 2024.
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7. Accrued Expenses
Accrued expenses consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
As of
June 30, 2025 December 31, 2024
Hosting costs $ 4,460 $ 3,047
Marketing and tradeshow expenses 1,830 1,728
Contract labor costs 1,717 1,043
Reimbursable employee expenses 1,297 1,569
Audit and tax expenses 1,071 1,029
Legal costs 994 289
Third party license fees 961 668
Taxes payable 655 1,285
Capital expenditures 16 66
Other accrued expenses 1,546 664
Total $ 14,547 $ 11,388
8. Debt
Senior Secured Credit Facilities Credit Agreement
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.
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. During the first three years of the Credit Agreement, the additional interest rate margin ranges from 1.5 % to 2.5 % in the case of Base Rate advances or from 2.5 % to 3.5 % in the case of Term SOFR advances, depending on our debt to recurring revenue leverage ratio (as defined in the Credit Agreement). During the final two years of the Credit Agreement, the interest rate margin ranges from 0.5 % to 2.5 % in the case of Base Rate advances and from 1.5 % to 3.5 % in the case of Term SOFR advances, depending on our debt to consolidated adjusted EBITDA leverage ratio (as defined in the Credit Agreement).
In addition, the Credit Agreement contains other customary representations, warranties, and covenants, including covenants by us limiting additional indebtedness, guarantees, liens, fundamental changes, mergers and consolidations, dispositions of assets, investments, paying dividends on capital stock or redeeming, repurchasing, or retiring capital stock, prepaying certain junior indebtedness and preferred stock, certain corporate changes, and transactions with affiliates. The Credit Agreement also provides for customary events of default, including but not limited to, non-payment, breaches, or defaults in the performance of covenants, insolvency, bankruptcy, and the occurrence of a material adverse effect on us.
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The following table summarizes outstanding debt balances (in thousands):
As of
June 30, 2025 December 31, 2024
Borrowings under revolving credit facility
$ 62,000 $ 62,000
Secured term loan facility 184,563 189,563
Less: Debt issuance costs (1)
( 938 ) ( 1,139 )
Total debt, net of debt issuance costs $ 245,625 $ 250,424
Debt, current $ 9,598 $ 9,598
Long-term debt 236,027 240,826
Total debt $ 245,625 $ 250,424
(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.
As of June 30, 2025, we were in compliance with all covenants contained in the Credit Agreement. In addition, 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 leased office spaces.
9. Income Taxes
The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant or unusual items, discrete events, or changes in tax law. Our operating subsidiaries are exposed to statutory effective tax rates ranging from zero to approximately 35 %. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. For the three and six months ended June 30, 2025, the actual effective tax rates were 124.7 % and 280.5 %, respectively. For the three and six months ended June 30, 2024, the actual effective tax rates were 0.4 % and 0.8 %, respectively. The change in the effective tax rates for each period as compared to the same period in the prior year were primarily due to a near pre-tax break-even position in 2025.
As of June 30, 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.
We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Due to our net operating loss carryforwards, the tax years 2016 through 2024 remain open to examination by the major taxing jurisdictions to which we are subject. There are no open examinations that would have a meaningful impact on our consolidated financial statements.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. We are currently evaluating the impact of the OBBBA to our consolidated financial statements; however, we do not anticipate the provisions of OBBBA to materially impact our current year effective income tax rate.
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10. Stock-Based Compensation
Compensation expense related to stock-based awards is accounted for using the estimated fair value of the award on the grant date. We calculate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. For service-based awards such as RSUs, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.
In June 2022, our Board of Directors granted to our Chief Executive Officer (“CEO”) a stock option award that is eligible to vest based on the achievement of various stock price appreciation targets. This option grant (the “2022 CEO option grant”) is our only outstanding stock-based award that vests based on the achievement of market conditions. For awards with market-based conditions, compensation expense is measured using a Monte Carlo simulation, and expense is 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 of our stock-based awards as they occur rather than estimating expected forfeitures. As of June 30, 2025, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $ 3.4 million and will be recognized over a weighted average period of 0.8 years. Total unrecognized compensation cost related to unvested RSUs was approximately $ 36.7 million, which will be recognized over a weighted average period of 1.7 years.
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 and six months ended June 30, 2025, we recognized $ 1.7 million and $ 2.9 million of stock-based compensation related to this program, respectively.
The following table summarizes the components of our stock-based compensation expense for the three and six months ended June 30, 2025 and 2024 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Cost of revenue
Subscriptions $ 205 $ 217 $ 448 $ 430
Professional services 1,355 1,461 2,762 3,039
Operating expenses
Sales and marketing 2,035 1,997 4,223 4,524
Research and development 3,286 2,919 6,224 5,920
General and administrative 3,812 3,306 7,075 6,593
Total stock-based compensation expense $ 10,693 $ 9,900 $ 20,732 $ 20,506
11. Basic and Diluted Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is computed similar to basic, except the weighted average number of common shares outstanding is increased to include additional outstanding shares from the assumed exercise of stock options and vesting of RSUs, if dilutive. The dilutive effect, if any, of convertible shares is
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calculated using the treasury stock method. As we reported net losses for all periods presented, all outstanding shares would be considered antidilutive if they were to be assumed as vested or exercised.
The following outstanding securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been antidilutive to earnings per share:
Three and Six Months Ended June 30,
2025 2024
Stock options 1,005,696 2,530,468
Non-vested restricted stock units 1,401,959 1,189,539
12. Commitments, Contingencies, and Other Matters
Minimum Purchase Commitments
We have a non-cancellable cloud hosting arrangement with Amazon Web Services (“AWS”) that contains provisions for minimum purchase commitments. Specifically, purchase commitments under the agreement total $ 220.0 million over five years . 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 and six months ended June 30, 2025 totaled $ 12.9 million and $ 23.3 million, respectively. Spending under this agreement for the three and six months ended June 30, 2024 totaled $ 10.7 million and $ 21.0 million, respectively. The timing of payments under the agreement may vary, but 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. However, the annual purchase commitments under these contracts are, individually and in the aggregate, immaterial to our consolidated financial statements.
Pegasystems Litigation
On May 29, 2020, we filed a civil complaint against Pegasystems, Inc. (“Pegasystems”) and Youyong Zou, a Virginia resident, in the Circuit Court for Fairfax County, Virginia. Appian Corp v. Pegasystems Inc. & Youyong Zou, No. 2020-07216 (Fairfax Cty. Ct.). On May 10, 2022, we announced the jury awarded us $ 2.036 billion in damages for misappropriation of our trade secrets and $ 1 in damages for violating the Virginia Computer Crimes Act. Pegasystems filed several post-trial motions seeking relief in the form of reducing the damages award or setting aside the jury’s verdict and either granting a new trial or entering judgment in Pegasystems’ favor. All of these motions were denied, and final judgment was entered by the Court on September 15, 2022. The final judgment reaffirmed the $ 2.036 billion in damages and also ordered Pegasystems to pay Appian $ 23.6 million in attorney's fees associated with the case as well as statutory post-judgment interest on the judgment at an annual rate of 6 %, or approximately $ 122.0 million per year.
Defendant Youyong Zou has satisfied the judgment of $ 5,000 (plus interest) against him in lieu of appealing that judgment. On September 15, 2022, Pegasystems filed a notice of appeal to the Court of Appeals of Virginia. 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. 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, and we cannot predict the outcome of any appeals or the exact time it will take to resolve them.
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Judgment Preservation Insurance
On September 1, 2023, we entered into a Judgment Preservation Insurance (“JPI”) policy in connection with our $ 2.036 billion judgment against Pegasystems. The total cost of the policy was $ 57.3 million and is comprised of the premium, a one-time broker fee, and Virginia lines tax. The policy provides up to $ 500.0 million of coverage.
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 $ 3.1 million and $ 6.2 million for the three and six months ended June 30, 2025, respectively. JPI amortization expense was $ 4.5 million and $ 9.0 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, $ 12.5 million of the unamortized balance is classified as ‘Prepaid expenses and other current assets’ while the remaining $ 16.7 million is classified as 'Other assets’ on our consolidated balance sheets.
Other Legal Matters
From time to time, we are subject to legal, regulatory, and other proceedings and claims that arise in the ordinary course of business. Other than as disclosed elsewhere in this Quarterly Report, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Share Repurchase Program
In May 2025, our Board of Directors authorized a program to repurchase up to $ 10.0 million of our common stock from May 2025 to December 2025. In June 2025, we repurchased 0.3 million shares under this program at an average share price of $ 31.91 , totaling an aggregate cost of $ 10.0 million. As of June 30, 2025, shareholders’ equity included 74.0 million shares outstanding, net of 0.3 million shares of common stock held in treasury.
13. Segment and Geographic Information
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.
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The following table summarizes revenue by geography for the three and six months ended June 30, 2025 and 2024 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Domestic $ 105,193 $ 90,534 $ 211,386 $ 184,647
International 65,447 55,916 125,680 111,638
Total $ 170,640 $ 146,450 $ 337,066 $ 296,285
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 June 30, 2025 were $ 52.4 million and $ 15.3 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.
14. Investments and Fair Value Measurements
Fair Value Measurements
U.S. GAAP establishes a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows:
• Level 1 - Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
• Level 3 - Unobservable inputs for which there is little or no market data and which require us to develop our own estimates and assumptions reflecting those that a market participant would use.
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 as of June 30, 2025 and December 31, 2024.
The valuation techniques that may be used to measure fair value are as follows:
• Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;
• Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts; and
• Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (i.e., replacement cost).
The carrying amounts of our accounts receivable, accounts payable, and accrued expenses approximate fair value as of June 30, 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.
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Investments
Our investment portfolio consists largely of debt investments classified as available-for-sale. Changes in the fair value of available-for-sale securities, excluding other-than-temporary impairments, have been recorded in ‘Accumulated other comprehensive loss’ in our consolidated balance sheets. The components of our cash, cash equivalents, and investments as of June 30, 2025 are as follows (in thousands):
As of June 30, 2025
Fair Value Measurement Balance Sheet Classification
Fair Value Level Cost Basis Unrealized Gains (Losses) Fair Value
Cash and Cash Equivalents Short-term Investments and Marketable Securities
Cash
Level 1 $ 108,020 $ — $ 108,020 $ 108,020 $ —
Money market fund Level 1 4,187 — 4,187 4,187 —
U.S. Treasury bonds Level 1 43,929 ( 1 ) 43,928 — 43,928
Commercial paper
Level 2 7,994 ( 1 ) 7,993 — 7,993
Corporate bonds
Level 2 20,623 2 20,625 — 20,625
Total investments $ 184,753 $ — $ 184,753 $ 112,207 $ 72,546
At December 31, 2024, our investments consisted of the following (in thousands):
As of December 31, 2024
Fair Value Measurement Balance Sheet Classification
Fair Value Level Cost Basis Unrealized Gains (Losses) Fair Value
Cash and Cash Equivalents Short-term Investments and Marketable Securities
Cash
Level 1 $ 106,338 $ — $ 106,338 $ 106,338 $ —
Money market fund Level 1 12,214 — 12,214 12,214 —
U.S. Treasury bonds Level 1 24,376 26 24,402 — 24,402
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 six months ended June 30, 2025. Additionally, there were no transfers between Levels 1 and 2 during the six months ended June 30, 2025. Interest income on our investments, which is recorded within ‘Other (income) expense, net’ on our consolidated statements of operations, totaled $ 2.0 million and $ 3.6 million for the three and six months ended June 30, 2025, respectively. Interest income on our investments totaled $ 1.7 million and $ 3.6 million for the three and six months ended June 30, 2024, respectively.
The contractual maturities of our debt securities as of June 30, 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.
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