Slide 1: Q4 2019 and FY 2019 Earnings Call Presentation
Q4 2019 and FY 2019 Earnings Call Presentation Matt Calkins, Founder & CEO Mark Lynch, CFO
Slide 2: Disclaimer
Disclaimer In this presentation, we may make statements related to our business that are forward-looking statements under federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial
Slide 3: Q4 and Full Year 2019 Business Highlights
Q4 and Full Year 2019 Business Highlights • Completed acquisition of Robotic Process Automation Company* • Addressing a larger and converging Automation market • Became a ‘one-stop shop for automation’ to orchestrate humans, multi-vendor bots, and AI • Meeting CIO security, reliability, scalability,
Slide 4: 2019 Q4 Financial Highlights – ASC 605
2019 Q4 Financial Highlights – ASC 605 • Revenue • Subscription Revenue was $43.1m in Q4 2019, growth of 28% over Q4 2018 • Total Revenue was $70.5m in Q4 2019, growth of 17% over Q4 2018 • Retention • Net Revenue Retention Rate was 116% as of December 31, 2019 • Gross Margins* • Subscriptions Margi
Slide 5: 2019 Financial Highlights – ASC 605
2019 Financial Highlights – ASC 605 • Revenue • Subscription Revenue was $155.1m in 2019, growth of 34% over 2018 • Total Revenue was $266.3m in 2019, growth of 17% over 2018 • Retention • Net Revenue Retention Rate was 116% as of December 31, 2019 • Gross Margins* • Subscriptions Margin was 90% • P
Slide 6: Subscription Revenue – ASC 605
Subscription Revenue – ASC 605 USD Millions Y/Y Growth in % 43.1 40.4 38.0 33.8 33.6 44% 32% 41% 38% 28% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 66
Slide 7: Total Revenue – ASC 605
Total Revenue – ASC 605 USD Millions 69.4 70.5 66.9 60.2 59.6 26.2 27.8 27.7 25.1 24.7 1.2 1.2 1.2 1.3 1.3 40.4 43.1 38.0 33.8 33.6 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Subscription Revenue Maintenance & Support Professional Services *Total revenue may not foot due to rounding 77
Slide 8: Subscription Revenue Retention – ASC 605
Subscription Revenue Retention – ASC 605 125% 117% 117% 119% 116% 116% 0% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 88
Slide 9: Gross Margins - ASC 605
Gross Margins* - ASC 605 Subscriptions Professional Overall Services 91% 90% 90% 90% 89% 65% 66% 66% 68% 63% 32% 31% 33% 29% 25% Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2018 2019 2019 2019 2019 2018 2019 2019 2019 2019 2018 2019 2019 2019 2019 *Non-GAAP - Data does not include any stock-based c
Slide 10: Full Year 2019 Highlights – ASC 605
Full Year 2019 Highlights – ASC 605 Subscription Revenue ($MM) Subscription Overall Gross Margins** Revenue Retention* ints +200 basis po th Grow 64% 66% 34 % 155.1 116% 115.7 2018 2019 2018 2019 *As of December 31, 2019 **Non-GAAP - Data does not include any stock-based compensation expense 10
Slide 11: ASC 606 Overview
ASC 606 Overview • Appian adopted ASC 606 in our Annual Report on Form 10-K for the year ended December 31, 2019 using the modified retrospective method. • Our annual and quarterly results for 2019 were recast. • Amounts related to periods before 2019 were reflected in beginning retained earnings as
Slide 12: ASC 606 – Revenue Recognition Approach
ASC 606 – Revenue Recognition Approach Five-steps: 1 2 3 4 5 Allocate the Recognize Identify the Identify the Determine the revenue when, transaction price contract with a performance transaction price or as, we satisfy a to the customer obligation performance performance obligation in the obligatio
Slide 13: ASC 606 – Key Differences
ASC 606 – Key Differences ASC 605 ASC 606 SaaS (cloud) subscriptions Ratable Ratable Term license (on prem) Ratable Upon Delivery subscriptions Sales commissions Deferred over contract term Deferred over five year estimated economic life (new licenses) Deferred revenue Contractual amounts billed but
Slide 14: New Metrics
New Metrics ASC 605 ASC 606 Subscriptions, Software, and Scale of the Business Subscriptions Revenue Support Future Growth* Subscription Revenue Cloud Subscription Revenue Subscription Revenue Cloud Subscription Revenue Land and Expand* Retention Rate Retention Rate Profitability Non-GAAP loss from
Slide 15: Multi-year On-prem Licenses Obfuscate the Growth of Business
Multi-year On-prem Licenses Obfuscate the Growth of Business ASC 606 requires multi-year on-prem deals to be recognized upon delivery, which obfuscates the company’s growth trajectory. End of Year 1 End of Year 2 End of Year 3 Deal Terms – Example Term license (on prem) $240 $0 $0 Total contact valu
Slide 16: Annually Renewable On-prem Licenses Provide Visibility
Annually Renewable On-prem Licenses Provide Visibility Annually renewable on-prem licenses provide better visibility because they are recognized each year upon auto-renewal. End of Year 1 End of Year 2 End of Year 3 Deal Terms – Example Term license (on prem) $80 $80 $80 Total contact value: $300 su
Slide 17: 2019 Q4 Financial Highlights – ASC 606
2019 Q4 Financial Highlights – ASC 606 • Revenue • Cloud Subscription Revenue was $26.4m in Q4 2019 • Subscriptions Revenue was $42.1 million in Q4 2019 • Total Revenue was $68.6m in Q4 2019 • Retention • Cloud Subscription Revenue Retention Rate was 115% as of December 31, 2019 • Gross Margins* • S
Slide 18: 2019 Financial Highlights – ASC 606
2019 Financial Highlights – ASC 606 • Revenue • Cloud Subscription Revenue was $95.0m in 2019 • Subscriptions Revenue was $151.3 million in 2019 • Total Revenue was $260.4m in 2019 • Retention • Cloud Subscription Revenue Retention Rate was 115% as of December 31, 2019 • Gross Margins* • Subscriptio
Slide 19: Guidance - ASC 606
1 Guidance - ASC 606 Given on February 20, 2020 In $ Millions except for EPS Q1 2020 FY 2020 Cloud Subscription Revenue 27.8 – 28.1 121.3 – 123.1 Cloud Subscription Revenue Growth Y/Y 31% - 32% 28% - 30% Total Revenue 71.0 – 71.5 296.0 – 298.0 Total Revenue Growth Y/Y 18% - 19% 14% Adjusted EBITDA L
Slide 20: Appendix
Appendix 20
Slide 21: Balance Sheet
Balance Sheet As of December 31, 2019 2018 As Reported Impacts from Without Adoption As Reported $ in thousands (ASC 606) Adoption (ASC 605) (ASC 605) Assets Cash and cash equivalents $ 159,755 $ - $ 159,755 $ 94,930 Accounts receivable, net of allowance of $600 70,408 - 70,408 79,383 Deferred commi
Slide 22: Income Statement
Income Statement Three Months Ended March 31, Three Months Ended June 30, 2019 2019 As Reported Impacts from Without Adoption As Reported Impacts from Without Adoption $ in thousands, except for shares (ASC 606) Adoption (ASC 605) (ASC 606) Adoption (ASC 605) Revenue: SaaS (cloud) subscriptions $ 21
Slide 23: Income Statement
Income Statement Thre e Months Ende d Se pte mbe r 30, Thre e Months Ende d De ce mbe r 31, 2019 2019 As Re porte d Impacts from Without Adoption As Re porte d Impacts from Without Adoption $ in thousands, except for shares (ASC 606) Adoption (ASC 605) (ASC 606) Adoption (ASC 605) Revenue: SaaS (clo
Slide 24: Income Statement
Income Statement Year Ended December 31, 2019 2018 As Reported Impacts from Without Adoption As Reported $ in thousands, except for shares (ASC 606) Adoption (ASC 606) (ASC 605) Revenue: Subscriptions 151,299 (8,786) 160,085 126,012 Professional services 109,053 2,791 106,262 100,731 Total revenue 2
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Three Months Ended December 31, 2019 2018 As Reported Without Adoption As Reported $ in thousands, except for shares (ASC 606) (ASC 605) (ASC 605) Reconciliation of non-GAAP operating loss: GAAP operating loss $ (13,062) $ (12,070) $ (13,302) Add back: Stock-based
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Three Months Ended December 31, 2019 2018 As Reported Without Adoption As Reported $ in thousands, except for shares (ASC 606) (ASC 605) (ASC 605) Reconciliation of non-GAAP net loss: GAAP net loss $ (10,797) $ (10,033) $ (13,903) Add back: Stock-based compensatio
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Ye ar Ende d De ce mbe r 31, 2019 2018 As Re porte d Without Adoption As Re porte d $ in thousands, except for shares (ASC 606) (ASC 605) (ASC 605) Reconciliation of non-GAAP net loss: GAAP net loss $ (50,714) $ (49,391) $ (49,451) Add back: Stock-based compensati
Slide 28: Stock Based Compensation Expense
Stock Based Compensation Expense Three Months Ended December 31, Year Ended December 31, $ in thous ands 2019 2018 2019 2018 Cost of revenue: Subscriptions $ 185 $ 159 $ 647 $ 514 Professional services 287 1,072 2,748 1,717 Operating Expenses Sales and marketing 771 1,692 4,742 3,473 Research and de
Slide 29: Appian
Appian