Appian (APPN) investor relations material

Strategic focus and business evolution

• Shifted go-to-market strategy to prioritize high-value, complex use cases and C-suite alignment, accelerating this transition in summer 2024.

• Reduced sales organization to improve productivity and focus on larger deals, with leadership processes enhancing sales effectiveness.

• Federal business outperformed expectations despite volatility, growing faster than the overall company and benefiting from strong government relationships.

• Cloud transition is mature, with 80-90% of new business in the cloud, but self-managed deployments remain important for regulated industries.

• Profitability became a core focus, with significant margin expansion and disciplined headcount management over the past two years.

AI strategy and monetization

• AI is integrated into process automation, providing guardrails, security, and data access through Data Fabric.

• Document processing is a leading AI use case, with Agent Studio enabling customers to build and refine autonomous agents.

• Monetization occurs via an advanced tier with a 35% uplift for AI features, and incremental consumption-based pricing for high AI usage.

• AI is seen as both a growth driver and an enabler, interwoven with the broader platform and modernization efforts.

Market environment and capital allocation

• Macroeconomic volatility has not yet impacted customer engagement, deal cycles, or win rates.

• Federal sector disruption was managed effectively, with long-term trends favoring automation and efficiency.

• First year of meaningful cash flow generation, with net debt approaching zero and a focus on maintaining financial strength.

• Capital allocation includes share buybacks and a cautious approach to M&A, with opportunistic but unlikely large acquisitions.