Q3 2019 Earnings Call
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Thank you very good afternoon. Thank you for joining us today to review happy in third quarter financial results.
With me on the call it <unk> Caulkins, Chairman and Chief Executive Officer, and Mark lunch Chief Financial Officer.
After prepared remarks, well open the call for acute <unk> session.
During this call we may make statements related to our business that are forward looking statements under federal Securities laws that are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act would like to 95.
Putting statements related to our financial results trends in guidance for the fourth quarter and full year 2019.
Benefits of our platform industrial market trends, our go to market in growth strategy, our market opportunity ability to expand our leadership position ability to maintain an upsell existing customers and our ability to acquire new customers.
The words anticipate continued estimate expect intend.
And some are expressions are intended to identify forward looking statements were similar indications of future expectations.
These statements reflect our views only as of today and should not be reflected upon.
Representing our views of any other subsequent date. These statements are subject to a variety of rest and uncertainties that could cause actual results could differ materially from expectations.
A discussion of the materials and other important factors that could affect our actual results. Please refer to that as contains an art.
2019, 10-K filed with.
And other periodic filings with the FCC. These documents and the earnings call presentation are available in the Investor Relations section of our website at Www Dot com.
Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to tables in our press release and the Investor Relations for troubled web site for a reconciliation of these measures that are most directly comparable GAAP financial measures.
I'd like to turn the call over to our CEO back office, but [noise].
Thanks, well, thank you all for joining us today.
In the third quarter 2019 African subscription revenue grew 38% year over year to $40.4 million.
And our non-GAAP operating loss of $7.2 million.
Subscription revenue retention remains strong at 119% as of September Thirtyth.
These results exceeded our guidance [laughter] key growth drivers this quarter work and me up our three strongest industries and partners, let's start with EMEA.
EMEA, including Europe , the UK, the Middle East Africa increased subscription revenue.
About 60% to both Q1 in Q2 of this here in Q3 was once again, our fastest growing territory with subscription revenue growth of 65% compared to the third quarter of 2018.
We signed a notable UK expansion deal with a top 10 Global Bank had an up your customer a since 2016 in Q1. This leading bank made a multimillion dollar African purchase to manage regulatory changes the financial operations Fritz Global services risk Department.
This quarter the bank purchased another half a million dollars software to expand our platform into its commercial bank.
Use the licenses to deploy a customer Onboarding and New York customer application.
We will also deliver this division's first project in eight weeks under the I've been guarantee.
Additionally, EMEA contributed third of our new logos this quarter, including a top 10 European Superstore chain. This organization purchased up into a place portions of their legacy system and better coordinate its marketing procurement and sales teams to execute its food and non food promotions.
We won this deal over two competitors because we delivered a complex custom demo very quickly then just three days.
Financial services continues to be our largest and one of our fastest growing industries in Q3 subscription revenue for this industry grew 48% compared to the same quarter last year I mentioned, a few notable expansion scan financial services this quarter.
Topped five global investment Bank has been an African customer for three years in Q3, it purchased millions of dollars at new Afton software, where this expansion the bank will add 50% more users to its existing consumer banking app, bringing the bank closer to meeting its goal of standardizing customer case management you know yeah.
[laughter]. Additionally, they'll develop a new asset servicing application to notify institutional clients when market events affect their portfolios.
This application will allow the bank to inform clients up to two times faster and will be delivered in the <unk> eight in eight weeks and will be delivered in eight weeks gives me under the have been guarantee.
[laughter]. Additionally, a top five global asset management firm and existing up in customer since 2018 purchased licenses in Q3 to build their 16th Appian application.
They will use these licenses to replace the legacy system without prior to this purchase financial advisors would submit documents requesting changes to their clients accounts and the firm's employees would manual answer the changes into multiple systems.
With that being the information from the documents will be updated into those systems automatically.
They did not evaluate any competitors for this project because of the proven impact of their existing I've been applications.
I worry U.S. federal sector grew subscription revenue, 50% five zero compared to Q3 last year and we close deals at a few notable agencies this quarter.
I'm going to defense command, the Boston additional half a million dollars a new software licenses in Q3, they'll build to new applications, one to manage procurement and another for HR onboarding.
The group purchase SAPIEN because of our ease of use which they've experienced first hand, with our cloud trials and existing capital projects.
Oh civilian federal agency and one of the largest researchers in the world became a new afton customers. This quarter, they've built a recruitment management application with their purchase before wrapping it took days for research groups to understand the status of open jobs and their remaining staffing budget without being they'll be able to coordinate work across multiple teams together instant visibility.
On the status of recruiting activities.
Several vendors competed for this deal, but our reputation in the federal government set us apart [laughter] the customer selected that being after receiving references from other agencies and viewing demos of they're happy enough actions.
Half of the world's 10 largest life sciences companies are have been customers, making it our third largest industry. This quarter. We saw a couple of notable expansions in life Sciences, a top five U.S. biotechnology from has been an up in customer for two years in Q3. It doubled its total software purchases with a multimillion dollar deal.
That expands our platform across its enterprise.
From currently uses happening in three of five business lines for customer Onboarding regulation management and external engagement tracking.
We won this enterprise wide deal because key decision makers across all business areas recognized our platforms flexibility.
Additionally, a top five global pharmaceutical company purchased over a million dollars of Appian software. This quarter they'll use these licenses to expand their foreign corrupt practices Act application into the Asia Pacific region. This app is already it already reduce their process cycle time in Latin America by 90%.
Currently the customer plans to deploy it too about half of its operational countries reusing existing happy in components to standardize global compliance.
They chose us because our platform is simple scale across the company.
Partners also continued to play a strong role in capturing new logos this quarter they doubled their new customer contribution compared to Q3 last year. This list of new customers includes one of the top 10, U.S. oil and gas service providers before Appian field engineers recorded.
Usage information about oil and gas equipment on the paper and spreadsheets, making it difficult to evaluate the quality of equipment vendors. They chose appian for our built in mobile functionality no hundreds of field engineers are using up in on offline mobile devices to track equipment usage in remote locations.
Also this quarter a partner helped us when a deal at one of the worlds largest entertainment companies.
Making them, a new happy and customer.
The company chose happened to standardize their human resources request process, which was managed using disjointed spreadsheets and hard to change applications. A single sales engineer met their requirements, where the customers at all built in just one week at our partner will deploy their first project in eight weeks under the Appian guarantee.
[noise] across industries and regions Howard ease of use and speed continue to differentiate us in sale cycles, allowing us to sell its a new organizations and expand within our existing customers.
Now, let's talk to turn the call over to Mark for a discussion of our financial Spark [noise].
Thanks, Matt I'll begin by reviewing the financial highlights of the quarter and they will provide details on our Q4 and for your 2019 guidance subscription revenue for the third quarter was 40.4 million, an increase of 38% year over year and above the high end over guidance, our total subscription software and support revenue was 41.6 million.
An increase of 35% year over year.
Professional services revenue was $27.8 million up 60% from 24 million in the prior year period, and consistent with 27.7 million in the second quarter, our partner ecosystem and the having guarantee continue to gain momentum hoping to sell more software [noise].
Total revenue in the third quarter was 69.4 million, an increase of 26% year over year and also above our guidance range. Our subscription revenue retention rate as of September Thirtyth was 119% within the 110% to 120% range that we target on a quarterly basis and up from 117%.
In the prior quarter are consistently strong resident retention rate is reflective of our value proposition and he mission critical nature of our offerings and we continue to be pleased with our customers expanded use of our platform. Our international operations contributed 32% total revenue for Q3 compared with 29% in the prior year period.
Reflecting continued strong growth both domestically and internationally as.
As a reminder, we will adopt S. C. Six a six on the modified retrospective basis. When we publish our 2019 10-K as a result, Q4 2019 will be the first time, we report under AOCI six to six as we've noted under 66 revenue recognition on cloud subscriptions will remain much.
Nearly unchanged our cloud subscription revenue was approximately 66% total subscription revenue for both the third quarter and first nine months of 2019 improvement from approximately 63 and 62% respectively for the same period last year now turn to our profitability metrics for the third quarter our non-GAAP .
Gross profit margin was 66% compared to 64% and the same period last year and 66% in the prior quarter subscription software and support non-GAAP gross profit margin was 90% and the third quarter consistent with the third quarter of 2018 or non-GAAP professional services gross profit margin was 31%.
In the third quarter consistent with the third quarter of 2080.
Total non-GAAP operating expenses were $53 million increase of 22% from 43.3 million in the year ago period non-GAAP loss from operations was 7.2 million in the third quarter ahead of her guidance in compared to a non-GAAP loss from operations of 8.1 million in the year ago period.
In the third quarter, we had $2.2 million the foreign exchange losses, compared to 20, $200000 and foreign exchange losses in Q3 2018, our guidance does not consider any additional impact potential impact to financial and other income and expense associated with foreign exchange gains or losses, as we don't estimate movements in foreign currency.
Exchange rates non-GAAP net loss was 9.3 million for the third quarter of 2019 weight loss of 14 cents per basic and diluted share compared to non-GAAP net loss of $8.2 million worry loss of 13 cents per basic and diluted share for the third quarter of 2080.
This is based on 65.5 million and 62.5 million basic and diluted shares outstanding for the third quarter 2019, and the third quarter 2018, respectively. We ended the quarter was 67.1 million shares outstanding compared to 64.8 million at the end of the second quarter. The majority of the difference in common shares relative.
After June 32019 reflects the increase of 1.8 million primary shares issued enter September follow on offering.
Turning to our balance sheet as of September 32019, we had cash cash equivalents of $165.6 million compared with 81.1 million as of June 32019. This cash increase primarily reflects the completion of a follow on equity offering in September which resulted in approximately 101.3 million.
Oh proceeds to the company after underwriting discounts commissions and expenses for the third quarter cash used in operations was 14.9 million for the nine months ended Septemberthirty 2019 cash used in operations was $3 million, which also included the reimbursement of $17 million in tenant improvement allowances excluding.
That our cash used in operations was 20 million.
I'm happy to announce that are headquarters build up was completed during the third quarter. So we're not expecting any material capital expenditures for remainder of the year.
Total deferred revenue was 114.1 million for the third quarter with respect to our billing terms. The majority of our customers are invoice on an annual upfront basis. However, as we have discussed. We also have had had some large customers that are built quarterly and others that are billed monthly as a result changes our deferred revenue or generally not indicative of them.
Momentum in our business.
Now turning to guidance.
First let me clarify that this guidance is under assay six of five second I'd like to remind you that we recorded approximately $1 million of onetime subscription revenue in the fourth quarter of 2018 from a customer cancellation with axa accelerated the recognition of the balance of that customers contract revenue into Q4 2018.
For the full year 2019 subscription revenues expected to be in the range of 154 million in $154.5 million representing year over year growth of between 33 and 34%.
Excluding the acceleration the year over year subscription growth would be between 34 and 35% total revenues expected is expected to be in the range of 265 million in $266 million, we expect non-GAAP loss from operations within the range of 35, and 33 million. Finally, we expect non-GAAP net loss per share between fit.
He seven and 54 cents this.
This assumes 65.5 million basic and diluted common shares outstanding.
For the fourth quarter 2019 subscription revenue is expected to be in the range of 42 million and $42.5 million representing year over year growth between 24 in 26%.
Excluding the acceleration the year over year subscription growth would be between 20 and 30%.
Total revenues expected to be in the range of 69.1 million in $70.1 million non-GAAP loss from operations is expected to be in the range of 10 million and 9.5 million, where the non-GAAP net loss per share between 15, and 14 cents. This assumes 67.3 million basic and diluted common shares outstanding.
With that let's turn it over to questions.
At this time, we will be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad.
Confirmation, telling a indicate your line is in the question Q you May press Star too if you would like to remove your question from the Q for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from the line of Raimo Lenschow of Barclays. Please proceed with your question.
Thanks, guys. This is more hit on for Rymill. Appreciate you taking my question one for I'm, Matt and one for Mark.
If I I mean, obviously, a great performance in EMEA and that's actually been frost with.
Some of the other vendors who have Oh, we have pointed out that the Brexit tradition is creating some headwinds well numbers, but just wanted to begin to like what are your what are you guys seeing in EMEA and what is working for you guys and have you seen any softness or the customer conversations getting dragged out longer doesn't seem from from those subscription growth numbers, you're putting but.
Just wanted to get moving around.
Yeah, well I've been watching that carefully because I I've heard some of the noise about a potential disruptions and and I I heard the other results, but I'll tell you I have not seen that in my observations of our own European operation I see a value proposition that's being up well.
And I see an operation that is up is well run and I'm.
Quarter after quarter I'm pleased with the progress that we're seeing there.
Thanks, and no one for Mark So I mean, obviously be recognize the 1 million benefit last year. So that creates a tough comp for subscription revenue in fourq, you, but even if I just calculate an implied guidance from a full year number in PQ you seem to be guiding down.
At least on my math, so I'm just wondering if you can give us the puts and takes US to is this is this something going on we should be a meaningful apart from just the 1 million benefit last last year. Thanks for that.
How do you mind, if I just just cutting on the yeah. Okay. So that's going to be some lumpiness, probably we do sell big deals to big customers, but but big picture. We are very confident about the business about our ability to win here and a and that therefore, that's that's the met a theme.
Okay understood. Thanks.
Our next question comes from the line of Chris Martin of Goldman Sachs. Please proceed with your question.
Hi, This is Kevin on for Chris. Thanks for taking my question on the Appian guarantee KPMG has been the main partner for you on this program and obviously reception has been very positive at what point would you consider expanding the program out to a additional partners.
Oh, we have actually expanded the appian guaranteed to additional partners already.
However, we have an expanded it broadly and as always when we work with partners. Our primary consideration is do we believe that this partner can deliver to the customer the level of quality and excellence in experience that we have built the business on.
And so we're not trying to over democratize. The Appian guarantee we're trying to keep it in safe hands KPMG is safe hands, I believe and and where other partners our authorized to do as well, it's because we believe in their delivery capability.
Got it okay that makes sense and then in the past you've talked about focusing in on sales rep productivity. It sounds like you made progress there sales and marketing spend was was down quite a bit as it pertains to revenue I think the lowest in several years and I could you talk a bit about progress you're having there.
Yeah, well I'm always pleased to see progress here, because I think it's a major growth opportunity for us So I'm I'm seeing what you're seeing and and I think that there is actually more we could do a I'm pleased with with what we've begun to do and I think that they'll they'll be more actually were up.
Where we are.
We're in a difficult position trying to communicate to the the uniqueness of our product to to a customer base that does not entirely understand these new terms and how companies fit in them from my standpoint, what we do is so fundamental we help organizations to create there.
Own applications as quickly as possible to change them and still have less applications to be powerful. So from my perspective, that's a very simple thing, but the customers faced with confusion, they see BPM and low code and case management and maybe some other things and.
We need to educate through that in order to make the connection and to make the sale and so when we talk about salesforce efficiency, we're talking about message assist efficiency and drilling the message so that even our new reps understand how to convey that message and and demonstrate the value proposition behind it. So it's kinda.
A challenge in.
Conveying an idea that more than just educating a person. So I believe we've made really good progress this year on streamlining and conveying the idea I think it's more powerful than it's ever been I also think if theres more to grow.
Great. Thanks for the color.
Our next question comes from the line above on sorry of William Blair. Please proceed with your question.
Hey, Jim Thanks for taking my question I guess on first touch on a little bit more about the partners now you've had the partners develops on their own applications. You know KPMG with a library application I guess a are you seeing more of that Matt and then be sort of are you are you sort of actively encouraging that and how you.
She incentivize more active encouraging them to do that love to get some color around sort of the actual.
Pardon is developing their own applications, which they started subscription and obviously that's nice flywheel in the platform.
That's right and I want to differentiate here, what we're really looking to encourage with our with our partner solutions is a solution that Scott sufficient force behind it to break through and succeed I don't want the merely to create some some marketing material or to claim that they've got a solution that's based on appian or to have.
In a in a database somewhere that this exists that you know nobody's ever going to sell or by instead, the intention is to create or maybe fewer solutions, but more potent ones. So that they're capable of breaking into the other consciousness of the partner the that theme the mind share of the that the partner executives that bring new solutions to today.
Our clients.
And and we actually get sold on site. So what I'm trying to do is focus our efforts around causing these early solutions to break through and I believe that we've got a few of them that have.
And I want to get us too much detail here, but we got a few that have exceptionally compelling cases value propositions and so.
I'm trying to.
Put our energy is primarily on the top few not so listening abroad.
Portfolio of solutions now, but.
Focusing on a few that we feel have real upside. So it's not so much of a recruitment effort as it is a as it is a momentum play where we have to throw our shoulder behind the same application that our client at our partner shoulders behind and then together, let's let's see if we can push this forward that's what I'd like to do it's more.
Focus and less just less just volume.
Got it Okay got it and then just another product one from me Oh, you didn't cover too much on the ice you see side, but love to understand sort of attraction I know, it's it's still relatively early the park has been around that long, but sort of what do you think we actually see side in terms of adoption.
Kale wins would be helpful or five wouldn't be helpful. Thank you.
Yeah, that's right well.
We have.
Essentially bundled the ITC features into the product. So we considered having it as a as a separate thing and reporting separate sales and having a separate salesforce, but we felt it given our existing success in the call center and the contact center markets that it would be better just enhance our ability. So we're not treating it as a separate thing.
However, I can tell you that the features are compelling that we've developed a even more so we used to talk about as are our separate thing we've been developing more it is it is more impressive than it used to be it is exciting I speak about it frequently at the CIO level because they've all got this issue they've all got call centers that are divergent technologically that aren't sharing data that arch.
Art relating to the customers as humans and so they're looking for a way to put this together streamline the process connect the the customer facing apparatus to the case processing apparatus, they're looking for that Golden Spike that brings the two together and nobody does that like we do so.
I I wouldn't say, it's all that different from what we're doing before we just have a more potent products that is capable of winning bigger and more deals, but we have kept up our success in and calls called contact centers.
Great. Thanks, the color guys and a nice job there. Thank you.
Thanks.
Our next question comes from the line of Terry Tillman of Raymond James. Please proceed with your question.
Hi, gentlemen, can you hear me okay.
Yes, yes, how does that go the nice job dot com, it's a nice job on the quarter.
My first question just relates to as you're seeing the strong traction with partners really driving the business any kind of pattern recognition in terms of when a partner is driving the deal like what are the deal sizes do they vary notably from as opposed to direct sales rep driving a new deals and then secondly that land and expand motion how's the velocity.
Then when a partner drove the initial deal then getting the next apt project as opposed to direct just would love some perspective, but again I know, it's early days, but any kind of commentary you can provide.
Yeah.
The thing that impresses me about the partner deal sourcing is that it's not just small deals it's not small companies and it's not small deals now in some cases it may be but what we're seeing at least from our.
Most substantial partners is that they can bring in a deal from a top company for a serious project. They they're capable of sourcing us just where we want to go with our own sales reps, which is my intention with the partner channel. It's not meant to be for cats and dogs and for deals that we wouldn't have wanted to focus on.
Ourselves, it's supposed to be an augmentation of our ability to get to the market augmentation and credibility in access and in deployment capability and that's that's what we're cultivating from our top partners. We want just as big a deal from those partners as we're getting from our own sales reps and we are getting that we are seeing that from our partners now.
Yeah, Great and then just maybe a follow up question and that's kind of a tough them because I'm sure you love All your industries, you're talking but you had top three industries that have been large and successful for a long while now and you gave some commentary on it but Matt do you see any kind of breakout other industries. They could start to kind of rival the top three or just anything.
You could provide on some other interesting vertical market scenario. Thank you.
Yeah, that's funny, what I saw this border was mostly a doubling down on the things that we're already working.
Europe was already great guns, and it did even better partners were already strong and they got they got stronger.
It.
Our top industries.
At this point our top three are further ahead of the rest of them than they were before this quarter. So what we're seeing is a bit success really follow success and then once we get a winning model. There's a long runway ahead and I believe that has been the case ever since we've been a public company at least and we knew that going out we knew.
That we had a very compelling value proposition and that our greatest challenge was making the connection to new customers and showing them that value proposition whether that be because the newness of the industry or the general unclarity of the nomenclature that guides people to come to a market and took a selection there's still a lot of early stage chaos out there.
But once we cut through that early stage chaos way, whether it's with a customer or with an industry or with a partner we've got a very compelling.
Message and value proposition and so where we've broken through you see a really meaningful breakthrough that that's how I read our recent results, but kind of add on a couple of the verticals that are showing a lot of promise for us our energy we talked about a one of the case season that talked about with our offline capabilities mobile capabilities and allowing workers on the.
Well fields or whatever to use app in and then manufacturing manufacturing is kind of the old late adopter, but youve. If you think about issues that they've got all over the place a couple of our a couple of big wins, we had last quarter, we're in manufacturing and we're starting to expand within within those two enterprises. So those are two verticals that could be right.
For expansion overtime.
Alright, Thanks, a lot.
Our next question comes from the line of Sanjit Singh of Morgan Stanley . Please proceed with your question.
Thanks for taking the question, Matt I think you sign a partnership with another won't be our key vendors and we like.
This quarter and just want to get your take on what you might be looking from its partnership relative to your past partnerships with blueprint.
And more generally where are the areas do you think.
Can be driving efficiency and need sort of workflow automation applications other process versus partnering with all other capabilities. How do you think about partner versus opportunity that you want to go after yourself.
Oh, that's a great question I'm happy to speak to it we see an emerging world of automation in which not just humans, but humans, Boston AI will together be a combined workforce to solve problems for organizations.
Those three.
Primary groups of agents that are going to come together to work are going to need and Orchestrator, you know to rationalize organize manage and analyze their combined efforts and so to oversee that diverse workforce.
We propose appian, we see appia and as the manager and we think that the challenges of managing and orchestrating are going to be substantial.
[noise] not only do you have humans, Boston AI, but in most organizations you're gonna have multiple vendors worth of box. So it wouldn't be at all surprised to see an organization that it invested in new I path bots and also in Blue Prism box. In fact, I think recent studies have shown that that's the norm not the.
Exception to have multiple.
But bought companies he hit the same time and so it's just all the more proof that there's going to have to be and orchestration and management layer to add coherence and Furthermore.
There's a lot to be gained from rationalizing all of these work factors that you have invested in bringing each to their best light and using them for their best purpose and detecting them when they're under or Miss utilized.
So I think we've got a vibrant role to play.
In this emerging automation market.
I'm pleased with our partnership with you I pass and we are continuing of course vibrantly with our partnership with Blue Prism and in fact, we continue to resell Blue Prism boss said have done so for many customers.
So.
That's what we expect out of that and I understand these are dynamic.
Changing companies in a dynamic changing space.
But I think that we have an enduring part to play in the the emerging automation market.
Great. That's very interesting and then I had one follow up for Mark as we sort of turn to six so six which having been through 11 companies that as such as it's okay.
Excessive accounting constantly be a headache and I wanted to get your initial but mark how each of the message to the growth the business going into next year. When you may have six so five 2000 people and systems.
Oh, 2020 result, I guess sort of provide a blaze in terms of how to access growth on a like for like basis or any high level thoughts on how we should expect to.
Think about underlying business as we trued up.
Yeah.
I just can't wait till six to six starts happening so [laughter], yeah, we'll be fine.
And in all seriousness.
Like the last guide six to five will be for Q4, and then Q1 of next year, we're going to guide on a 606 basis. So in the K you'll have the quarter is under six of five and six to six provided and so that we all the comparative basis to analyze Q1 of 2019 to then the Q1 2020 guy that we provide.
And we're still kind of newly with which things we're gonna guy to but with as you know with six a six the on Prem.
Subscription licenses get recognized upfront and so I can see us guiding to probably a quad metric in the subscription revenue for kind of that gives you flavor the growth of the company, but then you know two and a total software number which includes that upfront.
Component as well because.
You'll get a sense of the total totality of the software license of the business. So these are things were kind of new with right now I'm. The good news is about two thirds to 70% of our subscription revenue is cloud. So there will be some lumpiness, but it won't be anything like some of the some of the other companies that you've had to go through that were not only transitioning.
The six to six but they're also transitioning from perpetual licensing to subscription licensing as well and you had a lot of noise. There. So so it'll be a little lumpy little little noisy, but not yeah, I don't think it'd be terrible.
Great. Thank you Mark.
Yes.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from the line of Alex Kurtz of Keybanc capital markets. Please proceed with your question.
Thanks, and congrats on the quarter. It just want to have you guys maybe address retention rate, it's been very strong year over year quarter over quarter and it maybe just revisit the time of the IPO and what you thought the upside case was in retention rate in kind of where that stands now relative to all the different.
Initiatives that you have put in place since then just sort of maybe.
Our reset on what that number could look like over time or maybe at least at a minimum talk about what drove in the quarter.
Well I don't want to reset expectations, because I feel it's been pretty consistent about what we expect and we've been in that bracket every quarter. So it's it's one of the rare predictive successes I don't want again, the way of it [laughter]. However.
However, I'm I'm really pleased that as we have scaled as an organization as we've put down some fairly strong growth numbers and put in some more clients and grown our organization to more employees that we havent seen.
The wheels come off so to speak in any way instead, we've got the same kind of customer loyalty that we used to the same kind of strong value proposition and I think it takes a lot of care to be sure that that that conveys at scale and it gives me confidence that it could convey at scale in the future as well a lot of effort goes into this.
But do you want to add anything to that or no. I mean, it you can imagine Matt would always love it to be higher.
But I think the bracket that we have others reasonable on it to Matt's point, we've been within it since we've been a public company. The good news is where at the high end of it. So we're we're pleased with the door out right now.
Okay. So no dreaming the dream on what a new bracket could look like at this point.
You can dream all you why wouldn't [laughter] I would hold us accountable to it I keep enterprise that made it [laughter] alright, thanks guys.
Thank you.
Our final question comes from the line of Derrick Ward of Cowen and company. Please proceed with your question.
Great. Thanks, It's Andrew on for Derek No currently the government at a strong corridor quarter any other commentary on that and maybe just your outlook on that federal business for the next year or so in any early positive signs from your new I all four certification.
Well I'm glad you brought that up because we are at we do take pains to be sure that our certifications are ahead of the curve.
And we like to be early and we like to remind our federal buyers that we take their priorities, including those certifications very seriously they can count on us to take it seriously in the future as others. We happen to have some things that are indicative of our approach to serving the federal customer.
So I think that thats good for US I also believe we've got good momentum in federal I don't believe this marks any kind of a a long term high I think it's just one more step upward I see our potential as greater next year than it was this year.
And I think that we're already starting on a positive flooding I think there's.
There's a strong business to be built here.
Great and then maybe just touch on head count growth, Directionally, and kind of where you're adding people and if you've had any any change in the difficulty of attracting talent versus the past six to 12 months or is that pretty steady.
All right. So it it's always a challenge to attract.
The caliber of people that we seek to higher Appian is unusually focused on hiring terrific people and I've been over involved in the interviewing and the recruiting for for that reason because I think its foundational to our success since kind of skill led industry.
We also look for people, who have the character to to represent us in the field Thats very important it's not just a capabilities filter that we apply so.
It's never easy to find those people it got a little easier.
Last year, when the Washington post named US the best place to work in the Washington area, we appreciated that and it drove some interest and it raised our profile amongst people who are looking for something extraordinary and a career.
We.
We continue to grow our recruiting function.
And I am I.
Im pleased with both our ability to recruit this year and our ability to hold onto the talent. We've got Appian has an unusually low.
Employee attrition rate.
Hi, guys, that's best part of the secret to keeping.
A great team together is to it to not lose the talent you've got.
So on both sides, where we're doing well.
Great. Thanks, guys.
We have reached the end of the question answer session I will now turn the call over to my confidence for any closing remarks.
Hey, we appreciate very much your interest in App in the near time listening to US this evening for that I'm going to close the call.
This concludes todays conference you may disconnect. Your lines at this time. Thank you for your participation have a wonderful either.